Gratuity Addition With Full And Final Settlement - CiteHR
Rdsyadav
Educator, Management Consultant & Trainer
Nathrao
Insolvency N Gst Professional
Riteshmaity
Labour Law Advocate
Ruypasree
Hr Manager

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Dear Seniors, please guide me about the rules and laws on gratuity.An employee has resigned and his gratuity would be settled with his full and final .How to proceed with the process.
Section 7: Determination of the amount of gratuity

(1) A person who is eligible for payment of gratuity under this Act or any person

authorised, in writing, to act on his behalf shall send a written application to the

employer, within such time and in such form, as may be prescribed, for payment of such

gratuity.

(2) As soon as gratuity becomes payable, the employer shall, whether an application

referred to in sub-section (1) has been made or not, determine the amount of gratuity and

give notice in writing to the person to whom the gratuity is payable and also to the

controlling authority specifying the amount of gratuity so determined.

(3) The employer shall arrange to pay the amount of gratuity within thirty days from the

date it becomes payable to the person to whom the gratuity is payable.

(3-A) If the amount of gratuity payable under sub-section (3) is not paid by the employer

within the period specified in sub-section (3), the employer shall pay, from the date on

which the gratuity becomes payable to the date on which it is paid, simple interest at such

rate, not exceeding the rate notified by the Central Government from time to time for

repayment of long-term deposits, as that Government may, by notification specify

This is the rule position.

Form I Rule 7(1) : Application of Gratuity by an Employee.

A reference to the Act and relevant rules will always be helpful.

How many years of continuous service has been put up by employee?

Gratuity is payable to an employee if the organisation has 10 or more employees and the employee concerned has provided continuous service for a period not less than 5 years and his service has not been terminated for any misconduct related to moral turpitude.
Gratuity is payable = Last drawn wages (Basic+DA) / 26 x 15 x no. of years.

Dear Sir, Thanks a lot for your support. The employee is serving since 1/11/2005. One mire query,why do we need to multiply the Basic &DA with numerical 15.
Sir, Further, I want to add if an employee’s working span includes:10yrs,3 months,11days.How the compensation and benefits payable to an employee would be calculated?
Dear sir,
You have not shared any employee's data yet my views in general are- Calculate earning based on attendance+ leave salary+ reiumursement unclaimed.Deduct amounts such as PF,ESI,canteen or other recoverable dues taken from all departments out of No dues certificate.
Last and pertinent is Gratuity entitlement, that will be if served min.5 years, then monthly basic salary divided by 26 multiplied by number of years of service. If his service is more than six months , consider one year.
Regds,
RDS Yadav
Directhor-Future Instt.of Management and Technology
Labour Law Advisor
navtaranghrs@gmail.com

Dear sir, Pl. read correction in above mail , which is as follows-
You have not shared any employee's data yet my views in general are- Calculate earning based on attendance+ leave salary+ reiumursement unclaimed till last working day.Deduct amounts such as PF,ESI,canteen or other recoverable dues taken from all departments out of No dues certificate to reach at net payable amount.
Last and pertinent is Gratuity entitlement, that will be if served min.5 years, then monthly basic salary divided by 26 multiplied by 15 and again multiplied by number of years of service. If his service is more than six months , consider one year.Thus you have two parts of his payable dues, now proceed for FNF payment.
Regds,
RDS Yadav
Directhor-Future Instt.of Management and Technology
Labour Law Advisor
navtaranghrs@gmail.com

Hi RUYPASREE,
If you would share relevant informations in one shot, you will also be clear and can understand how figures have been worked out. Like, it has been communicated, less than 6 months service to be ignored and more than six months service to be treated one year.You consider 11 years service for gratuity calculation only, as per provision .Answer to your two queries are also given below-
1)One mire query,why do we need to multiply the Basic &DA with numerical 15.::Its as per Payment of Gratuity Act.
2) Gratuity amount payable = Last drawn wages (Basic+DA) / 26 x 15 x 11.
Regds,
RDS Yadav
Directhor-Future Instt.of Management and Technology
Labour Law Advisor
navtaranghrs@gmail.com

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