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.
From United Kingdom, Aberdeen
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4From United Kingdom, Aberdeen
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Hi,
For availing gratuity, an employee should have completed a minimum of 5 years of continuous service in an organization. For employees with less than 5 years of service, no employer is liable to provide gratuity.
Moreover, gratuity means an ex-gratia amount, i.e., an amount given in gratitude from the employer to an employee for the good service rendered to the company.
Raj
From India, Madras
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For availing gratuity, an employee should have completed a minimum of 5 years of continuous service in an organization. For employees with less than 5 years of service, no employer is liable to provide gratuity.
Moreover, gratuity means an ex-gratia amount, i.e., an amount given in gratitude from the employer to an employee for the good service rendered to the company.
Raj
From India, Madras
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Hi,
For availing Gratuity, an employee should have completed a minimum of 5 years of continuous service in an organization. For employees with less than 5 years of service, no employer is liable to provide Gratuity.
Moreover, Gratuity means an ex gratia amount, i.e., an amount given in gratitude from the employer to any employee for the good service rendered to the company.
Raj
From India, Madras
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For availing Gratuity, an employee should have completed a minimum of 5 years of continuous service in an organization. For employees with less than 5 years of service, no employer is liable to provide Gratuity.
Moreover, Gratuity means an ex gratia amount, i.e., an amount given in gratitude from the employer to any employee for the good service rendered to the company.
Raj
From India, Madras
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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.
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Payment of Gratuity Act, 1972
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 the 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 the 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 the case of seasonal establishments) based on the 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 cases where a higher benefit of gratuity is available under any gratuity scheme of the company, the employee will be entitled to the higher benefit.
Calculation of Gratuity
1. Gratuity = (Monthly Salary x 15 days x No. of yrs. of service) / 26
2. The maximum 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 a fine up to Rs. 20,000/-. Other contraventions/offenses attract imprisonment up to 1 year and/or a fine up to Rs. 10,000.
From India, Coimbatore
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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 the 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 the 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 the case of seasonal establishments) based on the 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 cases where a higher benefit of gratuity is available under any gratuity scheme of the company, the employee will be entitled to the higher benefit.
Calculation of Gratuity
1. Gratuity = (Monthly Salary x 15 days x No. of yrs. of service) / 26
2. The maximum 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 a fine up to Rs. 20,000/-. Other contraventions/offenses attract imprisonment up to 1 year and/or a fine up to Rs. 10,000.
From India, Coimbatore
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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
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Hi,
Gratuity will be applicable for employees who have completed 5 years of continuous service and above in the same organization. The 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
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Gratuity will be applicable for employees who have completed 5 years of continuous service and above in the same organization. The 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
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(Fact Checked)-Gratuity is calculated for employees completing 5 years of service, not less than 1 year. The formula provided is accurate, including the 6-month clause. (1 Acknowledge point)
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Hi Rajesh,
Kindly help me in clarifying my doubts on the above-stated formula.
According to the formula stated above, the gratuity of an employee earning 15k per month, say after 5 years, would be Rs. 1,125,000 (15,000 * 15 * 5 = 1,125,000). However, he would be paid just 3.5 lakhs as gratuity as the maximum gratuity payable under the Act is Rs. 3,50,000/- (w.e.f. 24-9-1997).
Kindly clarify.
Regards,
Tandeep
From India, Delhi
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Kindly help me in clarifying my doubts on the above-stated formula.
According to the formula stated above, the gratuity of an employee earning 15k per month, say after 5 years, would be Rs. 1,125,000 (15,000 * 15 * 5 = 1,125,000). However, he would be paid just 3.5 lakhs as gratuity as the maximum gratuity payable under the Act is Rs. 3,50,000/- (w.e.f. 24-9-1997).
Kindly clarify.
Regards,
Tandeep
From India, Delhi
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(Fact Checked)-The user's reply is correct regarding the maximum gratuity amount payable under the Payment of Gratuity Act, which is capped at Rs. 3,50,000. (1 Acknowledge point)
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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
From India, Delhi
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From India, Delhi
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suppose in any organisation the saturday & sundat is off then the formula remains the same for calculating gratuity. azeem
From India, Delhi
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From India, Delhi
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Dear Azeem,
The Act does not provide a separate formula for the calculation of gratuity amounts for units with a five-day working week.
Regards,
R.N. Khola
Skylark Associates, Gurgaon (Haryana)
(Labour Law & Legal Consultants)
From India, Delhi
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The Act does not provide a separate formula for the calculation of gratuity amounts for units with a five-day working week.
Regards,
R.N. Khola
Skylark Associates, Gurgaon (Haryana)
(Labour Law & Legal Consultants)
From India, Delhi
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I want to know my organization driver working 13 years basic Dhs.1000/- how can calculating the gratuity how much the total
From United Arab Emirates, Dubai
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From United Arab Emirates, Dubai
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(Fact Checked)-The calculation of gratuity for an employee with over a year of service is based on a formula. For those with less than a year, it's not applicable. For your driver with 13 years of service and a basic of DHS 1000, the gratuity calculation can be determined using the applicable formula. (1 Acknowledge point)
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[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. The 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 mean for?]
From India, Mumbai
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Hi,
Gratuity will be applicable for employees who have completed 5 years of continuous service and above in the same organization. The 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 mean for?]
From India, Mumbai
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Hi,
I would like to know about the calculation of gratuity. What is the formula for calculating the gratuity if an employee completed 7 years with the organization? If the monthly salary is 35,000 and the basic is 17,500, then how much amount of gratuity is payable?
From India, Mumbai
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I would like to know about the calculation of gratuity. What is the formula for calculating the gratuity if an employee completed 7 years with the organization? If the monthly salary is 35,000 and the basic is 17,500, then how much amount of gratuity is payable?
From India, Mumbai
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Dear Friends, Now the Gratuity limit is increased Rs.10.00,000/- Previous it was Rs.3,50,000/-
From India
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From India
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Dear Sachin,
Service period starts from the date of joining.
Regards,
R.N.Khola
Dear All,
Please let me know when the period (5 years) starts: either at the date of joining or at the date of confirmation. I am not clear about this.
Regards,
Sachin
sachin.a@upt.in
From India, Delhi
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Service period starts from the date of joining.
Regards,
R.N.Khola
Dear All,
Please let me know when the period (5 years) starts: either at the date of joining or at the date of confirmation. I am not clear about this.
Regards,
Sachin
sachin.a@upt.in
From India, Delhi
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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, 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 have mentioned that on retirement or death gratuity is applicable... but I have always tried to make management understand that even on resignation after 5 years of service, gratuity is applicable. Am I right in saying so or not?
From India, Chandigarh
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Eligibility:
1. Any person employed on wages/salary.
2. At the time of retirement, 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 have mentioned that on retirement or death gratuity is applicable... but I have always tried to make management understand that even on resignation after 5 years of service, gratuity is applicable. Am I right in saying so or not?
From India, Chandigarh
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(Fact Checked)-The information provided in the user reply is correct regarding gratuity eligibility conditions and the applicability on resignation after 5 years of service. Well done! (1 Acknowledge point)
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Hi,
Gratuity will be applicable for an employee who has completed 5 years of continuous service, i.e., in a calendar year, he has to work for 240 days. Only then will he be eligible for gratuity.
From India, Mumbai
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Gratuity will be applicable for an employee who has completed 5 years of continuous service, i.e., in a calendar year, he has to work for 240 days. Only then will he be eligible for gratuity.
From India, Mumbai
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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
From India, Delhi
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From India, Delhi
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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
From India, Madras
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From India, Madras
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Dear member,
We are to consider the rate of the last drawn basic wages while calculating gratuity [sec. 4(2)].
Regards,
R.N. Khola
Hi Sir,
I have one doubt in the following formula for calculating gratuity: ((Basic + DA) * 15/26) * Basic means current basic or average basic of experience.
From India, Delhi
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We are to consider the rate of the last drawn basic wages while calculating gratuity [sec. 4(2)].
Regards,
R.N. Khola
Hi Sir,
I have one doubt in the following formula for calculating gratuity: ((Basic + DA) * 15/26) * Basic means current basic or average basic of experience.
From India, Delhi
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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 the Gratuity Act 1972, now the maximum gratuity amount payable is Rs. 10,00,000.
From India, Mumbai
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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 the Gratuity Act 1972, now the maximum gratuity amount payable is Rs. 10,00,000.
From India, Mumbai
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Dear Member,
The Payment of Gratuity Act, 1972 does not have any provision relating to any contribution from any corner. The employer is liable to pay the gratuity amount as and when payable.
Regards,
R.N.Khola
"Our organization does not have this provision for contributions. Does that mean the employer is liable to pay the entire amount from their side only?"
From India, Delhi
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The Payment of Gratuity Act, 1972 does not have any provision relating to any contribution from any corner. The employer is liable to pay the gratuity amount as and when payable.
Regards,
R.N.Khola
"Our organization does not have this provision for contributions. Does that mean the employer is liable to pay the entire amount from their side only?"
From India, Delhi
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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
From India, Pune
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From India, Pune
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(Fact Checked)-The calculation of gratuity includes fractional years of service. For 27 years, 5 months, and 24 days of service, the gratuity will be based on the total duration of service, including the fractional part. Ensure you include all the years, months, and days in the calculation. (1 Acknowledge point)
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Hi Tandeep,
Kindly help me in clarifying my doubts on the above-stated formula.
According to the formula stated above, the gratuity of an employee earning 15k per month, say after 5 years, would be Rs. 1,125,000 (15,000 * 15 * 5 = 1,125,000). However, he would be paid just 3.5 lacs as gratuity since the maximum gratuity payable under the Act is Rs. 3,50,000/- (w.e.f. 24-9-1997).
Kindly clarify.
Regards, Tandeep
Hi Tandeep,
You can find the formula that states (Basic + D.A.) * 15 * 5 / 26, which clearly states that 15,000 * 15 * 5 / 26 = 43,270. Further clarification is needed, 1,125,000 / 26 needs to be done, and the sum amount will be the gratuity.
Regards, Anthony Pinto.
From India, Mumbai
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Kindly help me in clarifying my doubts on the above-stated formula.
According to the formula stated above, the gratuity of an employee earning 15k per month, say after 5 years, would be Rs. 1,125,000 (15,000 * 15 * 5 = 1,125,000). However, he would be paid just 3.5 lacs as gratuity since the maximum gratuity payable under the Act is Rs. 3,50,000/- (w.e.f. 24-9-1997).
Kindly clarify.
Regards, Tandeep
Hi Tandeep,
You can find the formula that states (Basic + D.A.) * 15 * 5 / 26, which clearly states that 15,000 * 15 * 5 / 26 = 43,270. Further clarification is needed, 1,125,000 / 26 needs to be done, and the sum amount will be the gratuity.
Regards, Anthony Pinto.
From India, Mumbai
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(Fact Checked)-The calculation formula for gratuity is (Basic + D.A.) * 15 * years of service / 26. The maximum gratuity under the Act is Rs. 3,50,000. (1 Acknowledge point)
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Gratuity Calculation Explanation
Your calculation for the above question should be as follows:
- (15000 * 15 / 26) * 5 years of service
- (225000 / 26) * 5 years of service
- (8654) * 5 years of service
- = Rupees 43,270.
Therefore, the actual gratuity payment to the employee will be Rs 43,270.
If the gratuity amount exceeds Rs 350,000, then the employee will be entitled to a maximum of Rs 350,000 only.
I hope I have made it clear.
Regards,
Mahesh
Executive (HR & Admin)
From India, Bangalore
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Your calculation for the above question should be as follows:
- (15000 * 15 / 26) * 5 years of service
- (225000 / 26) * 5 years of service
- (8654) * 5 years of service
- = Rupees 43,270.
Therefore, the actual gratuity payment to the employee will be Rs 43,270.
If the gratuity amount exceeds Rs 350,000, then the employee will be entitled to a maximum of Rs 350,000 only.
I hope I have made it clear.
Regards,
Mahesh
Executive (HR & Admin)
From India, Bangalore
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Payment of Gratuity Act, 1972 & The Rules.ppt
THE PAYMENT OF GRATUITY ACT 1972.doc
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(Fact Checked)-The user's reply is [B]correct[/B] in providing detailed information on the Payment of Gratuity Act, 1972, including its applicability, eligibility, benefits, calculation of gratuity, and penal provisions. (1 Acknowledge point)