Gratuity Amount Limit Change: Has There Been an Update? Please Share Sources

Is there any change in the gratuity amount limit? Please reply with the source document that has indicated a change in the same. Thanks

Dear,

Not changed so far. Please be informed that this information relates to the Payment of Gratuity Act, 1972.

With Regards, R.N. Khola

The Payment of Gratuity Act 1972

Maximum Ceiling Amount: 3,50,000/-

Calculation: {Last drawn (Basic + DA) * 15 * number of years} / 26

Regards,

Charvaka Reddy

The Payment of Gratuity Act 1972 with a maximum ceiling amount of INR 3,50,000/-. The calculation is as follows: {Last drawn (Basic + DA) * 15 * number of years} / 26.

Regards,
Charvaka Reddy

Is there a required minimum of five years?
If yes, does the first-year training or probation period include it or not?

Dear Ashish,

Yes, a minimum of 5 years is required for gratuity. You asked whether the training period or probation period is included or not.

When an employee joins, they receive an appointment letter that includes a salary breakdown and mentions the probation period. The employee receives all benefits such as PF, SA, perks, etc., similar to regular employees. Upon completing the probation period, the company may confirm the employee's services with or without a salary hike. The only difference lies in the notice period. Therefore, the probation period is indeed included in calculating the total service.

Regarding training, if an employee receives only a consolidated stipend and their engagement letter states that they are not entitled to rights as regular employees, then the training period would not be considered.

Please share your thoughts.

RRS

Ashish,

The Payment of Gratuity Act 1972 states that a minimum of 5 years of service is required to be eligible for gratuity. The limit for gratuity payout is set at 3.5 lacs, calculated as 15/26 multiplied by the number of years of service multiplied by the last drawn salary (PF wages).

Thank you very much for your response.

Could anyone please explain how many acts are related to Contract Labour? Such as the Payment of Wages Act, Minimum Wages Act, Contract Labour (Regulation and Abolition) Act, and Workmen's Compensation Policy Act. Can anyone provide a detailed description?