Gratuity Issue-

Hello All Seniors,
I have confusion -
In my organization (IT -org.) one of our employee is working with us since last 6 years.
The Gratuity Act says -
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GRATUITY CALCULATION India

Employee Gratuity is calculated by the following formula:

(Basic + D.A) x 15 / 26 x No. of year in service*

*Minimum service put up is Five Years must
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Now I am getting confuse related to below questions -
1) when we suppose to give him Gratuity benefit ?
2) In our salary structure we are not provide any kind of D. A.
So how do we suppose to calculate ?
3) In above formula has written - No. of year in service* : :: which means minimum 5 yrs but how do we consider, - 5 yrs of service or 6 years of service.

Please let me know.
Waiting for your valuable reply.

With Regds
Ravi

Hi ravi,
the replies for ur queries are:
1. U can give him the gratuity benefit at the time of his resignation or retirement.
2. If their is no d.a in salary structure then u can give it on basic only
3. No. Of years of service means total no. Of years employee served in the org. 5 years is the eligibility criteria. So consider 6 years or consider the total no. Of years at the time of his leaving.
Hope u r clear now.
Thanks

Dear Ravi,
1) Gratuity is given to an employee who has served for a continuous five years and above, and at the time of resignation, superannuation, death or disability (not necessarily five years for death and disability).
2) If there is no DA provided by the company only basic component can be taken for gratuity calculation
3) Five years is the minimum criteria for an employee to become eligible for gratuity and you should take number or years five and above for calculation. And for every completed year of service or part thereof in excess of six months.

Thanks Kalpana
Thank Shreekanth.P.R
for your valuable thoughts.
Mr. Shreekanth.P.R, if an Employee has complete 4 years and 11 months (just near to complete 5 yrs non stop service) service at one organization.
and accidentally he / she die or may occur disablement (physical or mental) OR in another situation he may resign because of salary and personal growth.
Then this ACT and Calculation is applicable for him / her ???
with Regards
Ravi Kulkarni

Dear,
As per your below query if an employee complete 4 years and 11 months and in last 11 month employee must present for 240 days then he/she eligible for Gratuity.
Hope its clear
regards,
ram

HI RAVI,
1.If an Employee has complete 4 years and 11 months (just near to complete 5 yrs non stop service) service at one organization.
and accidentally he / she die or may occur disablement (physical or mental)
IN THIS CASE HE IS ELIGIBLE FOR GRATUITY. IN CASE OF DEATH N DISABILITY NO. OF YEARS IN SERVICE DOESN'T MATTER FOR THE ELIGIBILITY.
2.N if an Employee has complete 4 years and 11 months AND he resign because of salary and personal growth.
IN THIS CASE AS STATED BY MR. RAM if an employee complete 4 years and 11 months and in last 11 month employee must present for 240 days then he/she eligible for Gratuity IS RIGHT.
HOPE U R CLEAR NOW.
THANKS
KALPNA

Dear All,
Let me make one thing clear here - the condition of minimum qualified service of 5 years is applicable only if the employee resigns from his/her job. In case of death - whether natural or accidental, whether in the company premises or outside, there is no condition of minumum period. Even if the death takes place within one year of service, the kith and kin are eligible to get gratuity and that at higher rate than normal. Please refer to Payment of Gratuity Act, 1972 for confirmation. If necessary, I will produce relevant provision in the next post.
Thanks and regards,