Umakanthan53
Labour Law & Hr Consultant
Manojkamble
Sr. Hr Executive
Suresh2511
Labour Consultant
+2 Others

- How Gratuity is calculated for MNC employees who works only 5 days in week? What is the formula.
- Any law reference.
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Dear Himanshu,
Please note, there is no difference between 5 days or 6 days for calculation. It is only about if person had worked in the organisation for 4 years and 280 days in continuous employment. If Yes then He / She is entitled for the gratuity amount. Calculation formula will be : Current Basic / 26 * 15 * Number years of Service
Dear Manoj,
Thanks for reply....
- Current Basic / 26 * 15 * Number years of Service , this formula is for the company's who work for 26 days. Whereas those MNC who works for 22 days only for them also does the formula remain same or it should be 22 instead of 26 ?
Hi
It is no matter whether the employee works 5 days or 6 days in a week. The gratuity is calculated on Last drawn salary (Basic + DA)/26*15* number of year of service. If the service is 5 years and six months it will be treated as 6 years i.e. The formula is 26 days.
Regards
P.S.Lakshmanan
S. G. Management Services
(PAN INDIA Consultant – Labour Law Compliance,
PF, ESI, P Tax, Benefit Management &
POSH COMPLIANCE) - KOLKATA
Dear Himanshu,
I would like you to read the explanation given to sec.4(2) of the Payment of Gratuity Act,1972. The explanation clearly states that in case of a monthly rated employee, the 15 days' wages shall be calculated by dividing the monthly rate of wages last drawn by him 26 and multiplying the quotient by 15.
Therefore, as far as the formula for calculation of gratuity under the Act in respect of any monthly rated employee is concerned, the no. of his weekly working days is not relevant.
If at all it has got any relevance under the Act, it is only for the purpose of determination continuous service u/s 2-A of the Act. In case of an employee who is employed in an establishment which works for less than 6 days in a week is not in continuous service as per sec.2-A (1), he should be deemed to be in continuous service if he has actually worked for 190 days in a year or 95 days in a period of 6 months as per cl (a) and (b) of sec.2-A (2).
Dear Himanshu,
Employees working Offshore (on ships) worked on 6 months ON & 6 months OFF basis. Thus their average working days per month are 15, so as per your logic they should get gratuity as Last drawn Basic+DA*15/15*No. of years of service?
This type of Ideas will not come in our mind when we run our own business.
Manner of Calculating Gratuity: Since Sept. 1972 Gratuity was calculated as Last Drawn Basic+DA*15*No. of years of service / 30. This practice was continued till 1991 and thereafter as per new amendment after 19 years the divisor brought into practice is 26 days.
Regards,
Suresh
Thanks SGMC for sharing your knowledge.
Thanks Umakanthan Sir, for the deep explanation with law reference.
How Gratuity is calculated for employees are in 5 days in week?
** 190 days waorking where working is 5 days in a week as conteneous service.
The law/act speaks 5 years of service but anyone guided by any order of court can not be treated absolute unless untill the Goverenment makes a confirmation by way of Gazette notification.
Calculation : last paid basic [(Basic/26) X 15 X number of years completed service]
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