R.N.Khola
Labour Laws & Ir
Suhaskhambe
Executive Human Resource At Emcure Pharmaceuticals
Neha22111986@yahoo.co.in
Employee Engagement And Retention, Day To
Shringarika Srivastava
Hr Business Partner, Supporting Business
Shreekanth.pr
Hr Executive
Niyajahmed
Hr/ir/labour Law
Shasanaf
Accounts Assistant
Dkraj
Hr - Executive
Tandeep.saggu
Hr Generalist & Recruitments
Helen Raj
Hr - Manager
Andy 007
Hr- Asst. Manager S.k.logistics
+6 Others

Thread Started by #shasanaf

hi I would like to know about the calculation of gratuity. what is the formula for calculating the gratuity if an employee compleated less than one year with the organisation.
6th February 2008 From United Kingdom, Aberdeen
Hi
For availing Gratutity, an employee should completed Min 5 years of continuous service in an organisation. For employees below 5 years of service, no employer is liable to provide Gratuity....
More over Gratuity means:an Exgratia amount ie, an amt given in a gratitude from the employer for any employee towards his good service rendered for the company..
Raj
6th February 2008 From India, Madras
Hi
For availing Gratuity, an employee should completed Min 5 years of continuous service in an organisation. For employees below 5 years of service, no employer is liable to provide Gratuity....
More over Gratuity means:an Exgratia amount ie, an amt given in a gratitude from the employer for any employee towards his good service rendered for the company..
Raj
6th February 2008 From India, Madras
The formula for the calculation of the gratuity amount is (((Basic+D.A.)*15)/26)*No. of years of service. Kindly revert if the formula is not clear!! Cheers! Shringarika.
6th February 2008
Payment Of Gratuity Act, 1972

Applicability

Eligibility

Benefits

Calculation of Gratuity

Penal Provisions



--------------------------------------------------------------------------------



Applicability



1. Every factory (as defined in Factories Act), mine, oilfield, plantation, port and railway.

2. Every shop or establishment to which Shops & Establishment Act of a State applies in which 10 or more persons are employed at any time during the year end.

3. Any establishment employing 10 or more persons as may be notified by the Central Government.

4. Once Act applies, it continues to apply even if employment strength falls below 10.



--------------------------------------------------------------------------------



Eligibility



1. Any person employed on wages/salary.

2. At the time of retirement or resignation or on superannuation, an employee should have rendered continuous service of not less than five years,

3. In case of death or disablement, the gratuity is payable, even if he has not completed 5 years of service.



--------------------------------------------------------------------------------



Benefits



1. The quantum of gratuity is to be computed at the rate of 15 days wages (7 days wages in case of seasonal establishments) based on rate of wages last drawn by the employee concerned for every completed year of service or a part thereof exceeding 6 months.

2. The total amount of gratuity payable shall not exceed the prescribed limit.

3. In case where higher benefit of gratuity is available under any gratuity scheme of the Co., the employee will be entitled to higher benefit



--------------------------------------------------------------------------------



Calculation of Gratuity



1. Gratuity = Monthly Salary x 15 days x No. of yrs. of service

26

2. Max. Gratuity payable under the Act is Rs. 3,50,000/- (w.e.f. 24-9-1997)



--------------------------------------------------------------------------------



Penal Provisions



Nonpayment of gratuity payable under the Act is punishable with imprisonment up to 2 years (minimum 6 months) and/or fine up to RS 20,000/-. Other contravention/offenses attract imprisonment up to 1 year and/or fine up to RS 10,000.
7th February 2008 From India, Coimbatore
Hi Rajesh Thats a very good presentation of the answer. It’ll be really helpful for the one who is a layman on this topic. Cheers! Shringarika
7th February 2008
Hi,
Gratuity will be applicable for employees who have completed 5 years of continuous service and above in the same organization.
Formula for calculating gratuity is
((Basic + DA)*15/26)*No. of years of service which includes completion of 6 months of service also.
Regards
M. Helen
8th February 2008
Hi Rajesh,
Kindly help me in clarifying my doubts on the above stated formulla.
According to the formulla stated above the gratuity of an employee earning 15 k per month say after 5 yrs would be Rs. 1125000(15000*15*5= 1125000)
But he would be payed just 3.5 lacs as gratuity as Max. Gratuity payable under the Act is Rs. 3,50,000/- (w.e.f. 24-9-1997)
Kindly clarify
Regards,
Tandeep
29th October 2008 From India, Delhi
How the SL/CL/EL leaves calculate & how to give these to workers in the company. Whether we can give sc/cl combined for 5 days lease regularly
6th November 2008 From India, Delhi
suppose in any organisation the saturday & sundat is off then the formula remains the same for calculating gratuity. azeem
11th June 2009 From India, Delhi
Dear Azeem,
The Act does not provide separate formula for calculation of gratuity amount for those units which have five days working.
Regards,
R.N.Khola
Skylark Associates, Gurgaon(Haryana)
(Labour Law & Legal Consultants)
20th July 2009 From India, Delhi
I want to know my organization driver working 13 years basic Dhs.1000/- how can calculating the gratuity how much the total
22nd October 2009 From United Arab Emirates, Dubai
[QUOTE=Helen Raj;324071]Hi,
Gratuity will be applicable for employees who have completed 5 years of continuous service and above in the same organization.
Formula for calculating gratuity is
((Basic + DA)*15/26)*No. of years of service which includes completion of 6 months of service also.
Regards
M. Helen[/what does 26 meant for?]
25th May 2010 From India, Mumbai
hi
I would like to know about the calculation
of gratuity. what is the formula for calculating the gratuity if an employee
compleated 7 year with the organisation
if the monthly salary is 35000 & Basic is 17500
then how much amount of gratuity payble
20th June 2010 From India, Mumbai
Dear Friends, Now the Gratuity limit is increased Rs.10.00,000/- Previous it was Rs.3,50,000/-
20th June 2010 From India
Dear Sachin,
Service period starts from date of joining.
Regards,
R.N.Khola




3rd September 2010 From India, Delhi
Hi my query is that we have 3 conditions under eligibility
Eligibility
1. Any person employed on wages/salary.
2. At the time of retirement or resignation or on superannuation, an employee should have rendered continuous service of not less than five years,
3. In case of death or disablement, the gratuity is payable, even if he has not completed 5 years of service.
In our organization we havementioned that on retirement or death gratuity is applicable.... but i have always tried to make mgmt understand that even on resignation after 5 yrs of service gratuity is applicable... m i right in saying so or not????
13th September 2010 From India, Chandigarh
Hi,
Gratuity will be applicable for employee who has completed 5 yrs of continue service i.e.. in a calander yer he has to work for 240 day (Continues 5 Yrs of serivice)then only he will elgible for gratuity.
13th September 2010 From India, Mumbai
Dear Neha,
You are right in saying so.
Regards,
R.N.Khola



13th September 2010 From India, Delhi
Dear Member, Which of the provision of Payment of Gratuity Act, 1972 says that we are to consider 240 days of working in a calendar year ? Regards, R N KHOLA
13th September 2010 From India, Delhi
Hi Sir, I have one doubt in following formula for calculating Gratuity. ((Basic + DA)*15/26)* Basic means Current basic or Avg basic of experience
16th September 2010 From India, Madras
Dear member,
We are to consider the rate of last drawn basic wages while calculating gratuity.[sec.4(2)]
Regards,
R.N.Khola




16th September 2010 From India, Delhi
It is very simple..
Basic+DA*15(days)/26*No of years (not less than 5 years)
Note*
1)7 days in case of seasonal establishment.
2) In case of death and permanent disablement the employer has to pay the gratuity even before 5 years
3) Under Gratuity Act 1972, now the maximum gratuity amount payable is Rs. 10,00,000
16th September 2010 From India, Mumbai
Dear Member,
This Act i.e. Payment of Gratuity Act, 1972 do not have any provision relating any contribution from any corner. The employer is liable to pay gratuity amount as & when payable.
Regards,
R.N.Khola




22nd September 2010 From India, Delhi
if any person completed his service 27 year,5 month,24day & his basic+ DA 6000 how to calculate gratuity & calculate only 27 year or calculate also 27 year,5month,24 day
4th October 2010 From India, Pune
Hi Tandeep,
You Can find the formulae that states (Basic +D.A.)*15*5/26)
Which clearly states that 15000*15*5/26 = 43270
More clarification is 1125000/26 need to be done the sum amount will be the gratuity.
Regards
Anthony Pinto.
30th March 2013 From India, Mumbai
#Anonymous
Hii Tandeep
Your calculation to the above question should be like this:
(15000*15/26 ) * 5 years of service
(225000/26) * 5 years of service
(8654) * 5 years of service
= rupees 43270.
So the actual Gratuity payment to the employee will be Rs 43270.
If the gratuity amount would be more than Rs 350000 then the employee will be entitled to a max of 350000 only.
Hope i have made you clear..
Mahesh
Executive (HR & Admin)
24th November 2013 From India, Bangalore
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