Gratuity Calculation Confusion: Should Incentives and Allowances Count?

Dear Sir, I would like to know whether the various incentives and allowances we receive as part of our pay packet should be included in our average remuneration for the purpose of gratuity calculation. The incentives could come in the form of production incentives, attendance bonuses, housing allowance, and various other allowances. Or is the gratuity calculation only based on basic pay plus DA?

Regards,
dodejarl.

Gratuity is calculated based on the last drawn salary of the employee, which includes basic salary and dearness allowance only.

Regards,
Madhu.T.K

Dear seniors,

In regards to gratuity, I would like to ask whether it is calculated based on the last drawn salary or the salary from the last three months. I am a little confused about this matter. Please suggest.

Thank you.

Dear Member,

While calculating gratuity under the Payment of Gratuity Act, 1972, we are required to consider the monthly rate of wages last drawn by the employee.

With Regards,

R.N.Khola

Amit's confusion is genuine because for piece-rated workers, the gratuity is calculated based on the average wages earned for the last three months.

Regards,
Madhu.T.K

Piece-rated employees are employees who are employed for piece production, right? Wages are paid based on production.