Curious About Gratuity? Learn How It's Calculated and When You Can Receive It

Understanding Gratuity

Gratuity is a financial benefit given to employees as a token of appreciation for their service to the company. It is typically paid upon retirement or resignation, provided the employee has completed a minimum period of service, usually five years.

How to Calculate Gratuity

The calculation of gratuity can vary depending on the country's laws and company policies. Generally, it is calculated using the formula:

\[ \text{Gratuity} = \frac{\text{Last Drawn Salary} \times \text{Years of Service} \times 15}{26} \]

Here, the "Last Drawn Salary" includes basic salary and dearness allowance, and "Years of Service" is rounded down to the nearest whole number.

Regards,
Jitender Chauhan
HR

In simple terms, gratuity is a token given to an employee by an employer for working in the company. Gratuity is given after the employee completes five years.

Technical Explanation of Gratuity

In technical terms, I suggest you go through the Payment of Gratuity Act, which I have attached.

Regards