Hi.. If a person has completed 5 years in a company. The appraisel cycle is JULY-JUNE, i.e. he gets incremented basic salary in JULY. If he resigns in the month of AUGUST-2016, then which basic salary will be used to calculate the gratuity? Is it the incremented basic salary in JULY-2016 or the previous basic salary upto JUNE-2016?
From India, Mumbai
From India, Mumbai
Salary for the purpose of calculation of Gratuity will always be the salary drawn just preceding the date of leaving. Therefore, if he has drawn incremented salary at least for a day, the same will be the base for calculation of his gratuity. To be more specific, if he has received increment in July and he leaves the service in August he will get gratuity based on his July salary.
Madhu.T.K
From India, Kannur
4193Madhu.T.K
From India, Kannur
Always the last Basic Salary will be consider for the Gratuity and it will be calculated as 60% of that.
From India, Hyderabad
From India, Hyderabad
Regret to say that there is no rule which says that basic salary will be 60% of gross salary. Instead, it should be the base of salary on which the other components like HRA, DA etc are calculated and given. Moreover, salary means the salary agreed as payable to the employee in return for the labour the employer gets. It is for the convenience of the employer (to avoid or reduce his liabilities towards certain mandatory contributions like PF, Bonus etc) that basic salary is put at a lower rate. Even the special allowance (not the dearness allowance or the special allowance under the Maharashtra Minimum Wages notification which is part of statutory salary which will attract Bonus and Gratuity) which are paid common to all employees should be taken as part of salary for the purpose of calculation of gratuity, bonus or PF.
It is commonly accepted practice that these statutory contributions or payments are based on basic salary and dearness allowance. There has been wrong interpretation of salary into basic salary because of the emergence of CTC structure and the new establishments forming a new structure of salary with lesser amount as basic salary and more amounts of allowances such as HRA, conveyance and even washing allowances.
Madhu.T.K
From India, Kannur
It is commonly accepted practice that these statutory contributions or payments are based on basic salary and dearness allowance. There has been wrong interpretation of salary into basic salary because of the emergence of CTC structure and the new establishments forming a new structure of salary with lesser amount as basic salary and more amounts of allowances such as HRA, conveyance and even washing allowances.
Madhu.T.K
From India, Kannur
Gratuity is to be calculated on the last drawn wages. Wage includes basic and DA. HRA/ bonus etc. is excluded. There is no concept of 60%. Check section 2(s) of Payment of Gratuity Act.
Visit www.labourlawhub.com for more information.
From India, Kolkata
Visit www.labourlawhub.com for more information.
From India, Kolkata
Gratuity Calculation= [ (Basic Pay + D.A) x 15 days x No. of years of service ] / 26
Where, D.A = Dearness Allowance.
End of Service Benefits Eligibility :
1. Any person employed on wages/salary.
2. At the time of retirement or resignation or on superannuation, an employee should have rendered continuous service of not less than five years.
3. Payable without completion of five years only when death and disablement.
From India, Bengaluru
Where, D.A = Dearness Allowance.
End of Service Benefits Eligibility :
1. Any person employed on wages/salary.
2. At the time of retirement or resignation or on superannuation, an employee should have rendered continuous service of not less than five years.
3. Payable without completion of five years only when death and disablement.
From India, Bengaluru
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Gratuity calculation.doc
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