vijay9hr@gmail.com
2

Dear Team gratuity formula is last drawn basic salary *15/26 *no of years of service. I would like to know what is the reason for 15 and 26 shows in the formula can anyone explain
From India, Hyderabad
PROFESSIONALS AND BUSINESSES PARTICIPATING IN DISCUSSION
Madhu.T.K
Industrial Relations And Labour Laws
Saswatabanerjee
Partner - Risk Management
+1 Other

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Madhu.T.K
3769

Gratuity is an amount equal to 15 days salary for every completed year of service. One day salary is calculated by dividing the monthly salary by 26. Here 26 is the maximum working days in a month. That is the relevance of 26 in the formula. Since gratuity is to be paid at the rate of 15 days wages for every year of service, you have to multiply the daily wages or one day salary by 15. The amount so arrived should again be multiplied by the number of years of service to get the amount of gratuity.
From India, Kannur
saswatabanerjee
2324

Yes,
this was a decision of the Supreme Court
If you read the wording carefully, it says 15 days wages for every year worked, not half month wages.

Therefore, the court decided that it was necessary to work out the per day rate, which is monthly wages divided by 26 working days in a month (considering 4 weekly offs)

That is how the formula was computed

From India, Mumbai
Madhu.T.K
3769

Both 15 days and 26 days are not the out come of any court decision but it is there in the Payment of Gratuity Act itself. Please refer section 4(2) and the explanation thereto regarding the fifteen days' wages.
From India, Kannur

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