Gratuity Calculation - PDF Download - Salary Structure

Hi friends,

Can you clarify the calculation of gratuity with the salary structure as given below:

- Basic
- Other Allowances
- Superannuation Allowances
- Conveyance Allowances

Thank you.

Dear Ms. Lalita,

Mr. Sethupathy's calculation is correct. Repeat Basic + DA / 26 days x 15 days for every completed year of service. However, please note you MUST HAVE COMPLETED FULL FIVE (5) YEARS OF SERVICE with the present Company/Organization. Even one day less service - please note you are not eligible for Gratuity as per the Gratuity Act. The hearsay of 240+ days will be calculated as one full year of service is all applicable only after completion of 5 full years of service with the Company/Organization. In other words, if you work for more than 5 years and have put in 240 days attendance in that financial year, then the calculation should be taken as one year (i.e. 5+...+...) etc.

I hope to have clarified your query, maybe to your satisfaction (in case you have completed 5 full years of service) or maybe not to your satisfaction (in case you have NOT completed 5 years of service because the Gratuity Act does not say so!).

Regards,
Sundararaman

Dear All,

One correction in Mr. Sundaraman's view, as per the judgment of Madras HC, if you have completed 240 days in the fifth year, then it is deemed to be considered as completed 5 years of service, and you are eligible for the gratuity.

But many of us are unaware that 240 days of working in every year are absolutely necessary to fulfill the norms of continuous service in that particular year - even in the first four years of service - which please be noted.

After completion of five years of service, as Mr. Sundar stated, 6 months and above are rounded off as one year, and less than 6 months are neglected. For understanding this clearly, I have enclosed the M-HC judgment copy and rules on 240 days for your reference.

Hope I made it clear.

S. Sethupathy Excellent HR Services, (PAN India) Erode.

Dear Mr. Sethupathy,

Thank you for providing the judgment copy. However, I will check with my friends who are specialists in I.R. and will revert back to you, as there is a lot of difference of opinion in this issue. Is gratuity payable only after completion of 5 years, or is 4 years + 2140 days enough?

I will get back to you soon on this with further clarification.

Regards,
Sundararaman

Dear Mr. Sethupathy,

Further to my above email, I hereby provide the response from Senior Moderator J.S. Malik in the CiteHR Forum regarding a similar query:

Subject: Re: Gratuity Calculation

Dear,

Your husband has not completed 5 years of service, so he is not entitled to receive gratuity. Some people argue that according to a judgment of the Madras High Court, if an individual has completed 240 days in the fifth year, then the individual becomes entitled to gratuity. However, this is incorrect because the gratuity act states that one is entitled to receive gratuity after completing 5 years of service.

Regards,

J S Malik

Noida (U.P.)

Mobile: 9810557181

I have also sought clarification from my IR friends on this specific issue. As of now, I maintain that eligibility for Gratuity is only upon completion of 5 full years of service. The consideration of 240 days as one full year applies after completing 5 years - i.e., from the 6th year of service onwards.

Regards,

Sundararaman

I joined on 23rd December 2005 and was relieved on 31st October 2010. However, we only had Sundays off with no loss of pay (LOP). Could you please advise me on my eligibility for gratuity?

Regards, Bala

Thank you all for sending clarification on my question. I have another question now.

In the above salary structure, the company has not mentioned the DA details; maybe they purposefully omitted the words DA. However, they are giving Other Allowances - can we consider some part of DA as included in this?

Previously, before formulating this salary structure, they had given the salary structure as:

- Basic
- DA
- Conveyance
- Leave traveling allowance
- Medical reimbursement (if bills are not given, a standard of 8.33% of basic is provided)
- House rent allowance
- Hill station allowance

Could you please clarify? Also, please inform me if the government has any norms for fixing DA with respect to basic salary.

In terms of the Payment of Gratuity Act, 1972, in my view, an employee must complete 5 years of service. As regards the rounding of the period nearest to the year, it will be counted for the computation of Gratuity after the eligibility period of 5 years and cannot be prior to it under any circumstances. The Hon'ble Madras High Court has abundantly clarified this point. The question of 240 continuous service has no reckoning in the first 5 years of eligibility.

Dear Sir,

My name is Sanjay D. I joined the organization on 13th June 2006, and left on 11th June 2013. At the time of leaving the service, my basic salary was 10300. I received a cheque as final payment in December 2013, which was 6 months late. Can I claim interest for the late payment?

Could you please assist me in calculating the gratuity payment for the mentioned period? My total working days were 285 days on average each year from 13th June 2006 to 11th June 2014.

Thank you for your help.

Is it mandatory to give gratuity until retirement age in case of death, that is the remaining years of service?

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Good morning to all my seniors.

I have a doubt regarding the Gratuity Act. I had worked in an organization from September 1st, 2009, to July 1st, 2015. Therefore, I have completed a total of 5 years and 10 months (303 days) of service. Am I eligible for the Gratuity Act? Specifically, am I eligible based on 5 years or 6 years of service?

Since September 1st, 2009, I have been receiving PF. Can I proceed with the Gratuity Act application? Your assistance in this matter would be greatly appreciated. I am eagerly awaiting your response.