Gratuity Calculation Confusion: Is It Based on My Latest or Past Salaries?

Suppose I spent 5 years in a company and I had the last basic salary of $26,530. What would be my gratuity? Would it be calculated based on the basic salary of every year or the latest basic salary? Please confirm.

Gratuity Payment Under the Payment of Gratuity Act 1972

As per the Payment of Gratuity Act 1972, 15 days' pay (last drawn basic + DA) is to be paid for every completed year, subject to a maximum ceiling of Rs. 10 lakhs. The gratuity payment is subject to continuous service of 5 years in an organization.

Regards,
KC JHA

My dad has worked for 50 years in a coffee plantation. Will he be eligible for the latest Gratuity Act, which has been implemented, where the ceiling has been raised from 3.5 lakhs to 10 lakhs? Or are there any conditions?

Yes, your gratuity will be calculated based on your last basic salary. Also, note down the formula for gratuity calculation: BASIC X 15 X YEARS DIVIDED BY 26.

Under the provisions of the Payment of Gratuity Act, 1972, employees are required to submit their nomination forms in "Form F."

Gratuity Payment Conditions

Gratuity shall be payable to an employee only at the time of separation from the company and upon the completion of continuous service of five years. However, the completion of five years is not necessary in cases of death or disablement. Disablement is a state that incapacitates an employee for the work they were capable of performing before the accident or disease resulting in such disablement.

Service Tenure Calculation

The services rendered by an employee in all group companies will be taken into account when calculating the employee's tenure for gratuity purposes.

Gratuity Calculation Formula

Gratuity is calculated based on the last basic pay drawn by the employee at the time of separation. The formula to calculate gratuity is as follows: Basic Pay × Number of years in service × (15/26).

Regards

Gratuity Computation

The last basic salary will be considered for the computation of gratuity.

Basic = 26,530
Gratuity entitlement = 5 years * 15 / 26

Minimum service required: 5 years (4 years & 8 months as per the decision given by the Madras High Court).

Regards,
Anurag

Gratuity will be calculated based on the last basic salary. This calculation is determined by the employee's years of service in an organization. For example, if an employee works for 5 years and 7 months, the gratuity will be calculated based on 6 years. However, in your query, you have mentioned only 5 years.

Gratuity Calculation Formula

The formula for calculating gratuity is as follows:
Last basic salary * 15/26 * number of years

Using the given values:
26530 * 15/26 * 5 = 76529

Regards,
Sudhir Kumar
[Phone Number Removed For Privacy Reasons]

Gratuity will be calculated based on the last basic salary, and the employee should work a minimum of 240 days in a year for it to be calculated for 5 years of service.

Calculation Method

The calculation is as follows:
Last basic salary * 15/26 * number of years
26,530 * 15/26 * 5 years
Total amount = 76,529

Regards,
Sudhir Kumar
Asst. Manager HR
[Email Removed For Privacy Reasons]
[Phone Number Removed For Privacy Reasons]

My uncle took voluntary retirement from railway service on 01.03.2011 after completing 26 years of qualifying service. At the time of his retirement, his basic pay was Rs. 25,800. What should be his amount of DCRG?

Thank you, sir. Another thing to ask: The Central Government declared a hike in DA by 5% from January 2011, making the amount of DA 51%. However, the order for this increase was not issued until after 01.03.2011. Consequently, his DA was calculated at 45%. Is he entitled to receive DCRG based on the calculation of 51% DA? Will he receive arrears of DCRG for that 5% increase in DA?

That is the wrong calculation: last basic salary * 15/26 * number of years.

Regards,
Sudhir Kumar

Actually, I want to know whether he is eligible for ₹10 lakhs since he has 50 years of experience in the same organization. Can you please kindly tell me what his gratuity will be if he has 50 years of experience and his current salary is ₹5,590 (basic + DA) as per the eligible act?

Thanks

Your gratuity will be calculated as follows:

Gratuity Calculation Formula

(26,530.00 * 5 years * 15 days) / 26

Amount: Rs 76,529.00

[QUOTE=Minkysharma;1704145]Suppose I spent 5 years in a company, and I had the last basic salary of $26,530. What would be my gratuity? Would it be calculated based on the basic salary of each year or the latest basic salary? Please confirm.

Gratuity Calculation

Gratuity is calculated on the last drawn basic salary, and the calculation formula is as follows:

Gratuity amount = Last basic salary * number of years in service * 15 / 26

For the calculation of the number of years, it is rounded off to six months, meaning the completion of six months will be treated as one year.

Thanks & regards,
Anil Mishra

Kindly clarify for me if an employee who has completed 4 years and 8 months of service is eligible for gratuity as per the Gratuity Act.

Thank you.

Hi friend, In your post, you should have first mentioned your employer and whether you are covered under the Payment of Gratuity Act 1971. If your establishment is covered under the Payment of Gratuity Act, you should have first gone through the said act and then, if you had any doubts, you should have raised this question. From your profile, it is seen that your profession is a TEACHER! No offense meant but just advice to be more thorough in your efforts. Bye.

Regards,
Devdas

[QUOTE=prghr;1705169]Dear Friends, Kindly clarify for me: if an employee has completed 4 years and 8 months of service, are they eligible for gratuity as per the Gratuity Act?

Eligibility for Gratuity

Hi friend, to be eligible for gratuity under the Payment of Gratuity Act, one must complete 5 years of service. However, if an individual has completed 5 years of service, for the purpose of calculating the gratuity amount, more than six months is considered as one year. If you have any doubts, please contact me.

Regards, Devdas

As per the latest orders of the High Court of Madras, an employee who has put in 4 years and 240 days of service is eligible for gratuity.

Actually, I want to know whether he is eligible for 10 lakhs since he has 50 years of experience in the same organization. Could you please kindly tell me what his gratuity will be if he has 50 years of experience and his current salary is 5590 (basic + DA) as per the eligible act?

Thanks