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Dear Seniors, I am making a gratuity for an employee who has completed 9.5 years in a company. His basic salary is 21078/—, and the amount is coming around 109443. However, a few calculators are showing that it doesn't come under the gratuity act, and I am recalculating the amount, which is 94851/—. Could you please suggest which one is right?
From India, New Delhi
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Hi, Gratuity amount Rs.109443/- is correct for 9.5 years services ( last drawn Basic * 15/26 * 9 years).
From India, Madras

The gratuity cannot be less than Rs 109443 because for a service of 9 years (ignoring fraction of six months to make it 9.5 years, assuming that .5 years is not 5 months but 1/2 of the year) with a basic salary of Rs 21078 it can not be Rs 94851. Now, if the employee had at least ONE DAY in excess of six months then the gratuity amount would become Rs 1,21,604, because 9 years, 6 months and 1 day would make it rounded to 10 years.

You have taken the basic salary alone for calculation of gratuity. Why? Is there any provision under Payment of Gratuity Act that gratuity should be calculated on basic salary only? What is the definition of wages under the Payment of Gratuity Act? Nowhere in the Act, there is a mention of basic salary/ wages but as per section 2(s) “wages mean all emoluments which are earned by an employee while on duty or on leave in accordance with the terms and conditions of his employment and which are paid or are payable to him in cash and includes dearness allowance but does not include any bonus, commission, house rent allowance, overtime wages and any other allowance”. It is true that there are some exclusions like, bonus, commission, house rent allowance, overtime wages and similar other allowances. House rent allowance is a compensatory allowance paid to those employees who reside in leased houses, and if it is paid universally to all employees without any reference to whether the employee is residing in leased house or not or without reference to whether the spouse is getting HRA r not, will not qualify for exclusion. Still, for a defence you can say that it is excluded from the scope of wages. If it is accepted aslo, what about the other allowances that pay? Allowances similar to over time, bonus etc shall be excluded, but those allowances like "special allowance" cannot be excluded, any way. However, all the establishments pay gratuity on basic pay that they fix and the dearness allowance as applicable. Again, 90% of the private companies do not have DA in their salary structure! Certainly, they will give salary increase also every year. Then the question will arise, why should an employee be given salary increase every year? The answer is to " reward the performance and to compensate the cost of living". These are reflected in basic salary and dearness allowance and not under any allowance. If you put it under any other head, certainly that head will come under the scope of wages. This is my observation about gratuity qualifying salary.

From India, Kannur
Employees Seasonal Order not Seasonal permeant is this employee can you gave Retaining allowance.
From India
According to the Gratuity Act, based on an employee's basic salary of Rs. 21,078, the calculated gratuity amount should be Rs. 1,09,443, not less than this.

DOJ and DOL is missing in your question,

From India, Bengaluru
reyazs s
Hello Sir ,

As per your details .9.5 years means he has completed 9 years & 6 months . If he/she completed 6 months as per gratuity rules we have to convert it in 1 yr. So ,In this case 9.5 years will be calculated as 10 yrs .
So calculation will be as follows :
Basic X 15 X yrs of service
= ---------
21078 X 15 X 10
= ---------
Ans : 121603.84 /-

From India, Ahmadabad

Only more than six month service is rounded of to one year. Not exactly six months
From India, Thiruvananthapuram

Yes, had it been just one day more than six months then only it would be rounded off to the next number.
From India, Kannur
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