Is Special Allowance Part of Gratuity Calculation? Seeking Clarity on Company Practices

Hi,

My earlier company has not included special allowance in the gratuity calculation. Can anyone tell me if special allowance should be included in gratuity calculation? Whereas, the same was included in PF deduction.

Yogendra

As special allowance is a substitute for D.A. because in minimum wages D.A. is pronounced as special allowance, then why the latter cannot be included in the calculation of gratuity.

Our company has divided our salary as follows:
- Basic: $10,000.00
- HR: $6,000.00
- Conv: $2,000.00
- Medical: $2,000.00

Gratuity Calculation

Could you please advise on the calculation for our gratuity? Additionally, I would like to know how the leave encashment calculation is done.

Thank you.
Regards.

Regarding special allowance, is there any reference in the appointment letter or wage agreement that it is equivalent to basic or DA? If it is there, you are eligible to get gratuity on special allowance also.

Regards,
Abbas. P. S.

It is not mandatory to add the Special Allowance, Additional Allowance, Special Performance Allowance, etc.

With warm regards,

S. Bhaskar
[Phone Number Removed For Privacy Reasons]

Gratuity Calculation

In gratuity calculation, the special allowance is not included. The formula for calculating gratuity is:

(Basic Salary x 15 x Number of Working Years) / 26 Days

Leave Encashment Calculation

For leave encashment of more than 90 days, the formula is:

(Basic Salary x Number of Balance (PL) Days) / 30 Days

Please ensure these calculations are done accurately for employee benefits. Thank you.