Understanding Gratuity Calculation: Basic Pay or Basic Pay + DA for University Teachers?

Kindly let me know, while calculating gratuity, whether only the Basic pay is taken into consideration or if Basic pay + DA is considered. Also, I would like to understand if the rule for gratuity differs for University-approved teachers, considering that these teachers have summer vacation, Diwali (Winter vacation), and Christmas vacation. Is the facility of gratuity applicable to these teachers after 10 years of continuous service or after five years of continuous service? Please explain the rules related to the Gratuity Act.

Thank you,

Vijay

Gratuity Eligibility and Calculation

As per the Gratuity Act, an employee who completes 5 years of continuous service, including teachers in educational institutions, is eligible for gratuity. For the calculation of gratuity, only the basic pay plus DA that was last drawn by the employee is to be taken into consideration. However, if there is any emolument that has the character of basic pay or DA, it also needs to be included. For example, annual increments granted will form part of the basic pay in public sector undertakings and count for gratuity.

Regards,
B. Saikumar
HR & Labour Law Advisor
Mumbai

Research Option for Gratuity Calculation

Given the details above, you already have the information needed, as it has been well discussed. Actually, there is no specific calculation pertaining to that. It is a fixed amount given in a lump sum by the company to the employee for their loyal service of continuous 5 years in the company, as a token of gratitude. Refer to the Payment of Gratuity Act, 1972.

The Gratuity Act of 1972 prescribes under Section 4(2) the manner in which gratuity needs to be calculated. It shall be at the rate of 15 days' wages last drawn by an employee for each completed year of service, and any period in excess of six months needs to be taken as one year. The wages for the purpose of calculating gratuity shall be Basic + DA, but not any other allowance. It is no longer a bounty to be given by an employer out of his grace, since the Act vests in the employee the right to recover gratuity if not paid or paid short by approaching the Controlling authority under the Act.

Regards,
B. Saikumar
HR & Labour Law Advisor
Mumbai.