Understanding Gratuity Calculation: How Do You Figure Out Your Final Amount?

Wanted: Formula for Gratuity Calculation

Hi, I assume you are looking for the formula to calculate gratuity. The gratuity amount is typically calculated based on the number of years of service and the last drawn salary of an employee.

The formula for gratuity calculation is as follows:

Gratuity = (Last Drawn Salary x Number of Completed Years of Service x 15) / 26

In this formula:
- Last Drawn Salary refers to the basic salary plus dearness allowance that was last received by the employee.
- Number of Completed Years of Service includes the total number of years the employee has served in the organization.
- 15 represents 15 days of salary based on the last drawn salary.
- 26 represents the number of working days in a month.

Please note that the gratuity calculation formula may vary slightly based on the employment laws of the country or region. It's essential to consult with your organization's HR department or refer to the applicable labor laws for precise calculations.

I hope this information helps! Let me know if you need further assistance.

Hi Pawar,

Here you go.

The calculation for the last drawn basic salary is as follows:
Last drawn basic salary x 15 / 26 x Number of years of service.
Here, '15' refers to the half-month salary, and '26' refers to the number of working days in the month, assuming 8 working hours per day.

Regards,
Bharath Bhushan

Dear Member,

Please provide the formula under which Act/Rules/service rules (Central or State).

With Regards,
R.N.Khola

QUOTE=pawarmohan;1104076]Wanted Formula of Gratuity Calculation[/QUOTE]

Dear nb85,

Gratuity is an award for his/her long and meritorious services with the firm and is governed by the Payment of Gratuity Act 1972.

An employee is eligible for gratuity only if he/she has been in service with the company for five years continuously at least. Gratuity can be calculated as "Basic salary x 15/26 x years spent in service".

In the case of death or disablement while on duty, continuous service for 5 years is not necessary.

For any further queries, you can email me at khamparianeha@gmail.com.

Regards,
Neha

Gratuity is paid 15 days for every completed year of service. First, one should have completed 5 years of continuous service. To arrive at 15 days of salary, (Basic + DA) / 26 = one day's salary. Multiply this by 15 to calculate 15 days of salary. This calculation should be done regardless of the number of days in a month, as ruled by the Hon'ble Supreme Court of India.

This amount is then multiplied by the number of years of service put in by the employee. If 6 months or more have been completed, it is considered as 1 year; less than 6 months is neglected. However, the primary condition is that one should have completed 5 years of service.

NAGARAJ

Respected Nagraj,

Is there any compliance that a worker must have to work 240 days every year to be eligible for gratuity?

Thanks & Regards,
Ravinder Vardhman

Hi Pawar,

The formula for calculating the final settlement amount is as follows: last drawn salary (basic + DA) * years of service * 15 / 26.

Best Regards,
Sumit Kumar Saxena
9899669071, 0120-4131277

Hi Neha,

I know the formula; we are using it, but in my organization, there is a CTC concept. However, in my organization, they will pay us after 5 years of service; they are deducting it after a 6-month probation period. We are using this formula - basic salary/26*15 and dividing it by the months in which we have to collect it from the employee.

Can you please tell me if this is the right way? I don't think it's right.

Regards,
Neha