Hai friends, Please clarify that, what is the difference between Service Pay & Gratuity. Are both are same or different or not. If different please tell me the calculation formula for Service Pay & Gratuity. I need to know to clear final settlement for a staff (completed 07 years service in our company). VERY URGENT.
From India, Warangal
Dear Colleague,

There is no concept called " Service Pay" under any Labour Law. Only in case of termination, then the concept called "Severance Pay" to be paid which is more of a compensation on such cases. This is called Retrenchment Compensation. Hope you are not meaning this here. Any other "service pay" might arise based on internal policy of organization, or by way of any settlement etc which are internal to organization or at the discretion of the organization.

In the case of Gratuity it is legally payable for an employee who had worked for 5 or more years of continuous service in an establishment. The calculation is 15 days wages for every completed year of service to be paid on Basic and DA of the person.

BASIC + DA / 26 x 15 x Number of completed year of continuous service = Amount of Gratuity Payable

From India, Chennai

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