How Do You Calculate Gratuity and DA for Employees with Over 4 Years of Service?

Hi all, I wanted to know how to calculate the gratuity for those who have stayed more than 4 years in the same organization. How do you calculate the DA in that process?

Thanks,
Nag

Gratuity Calculation

Gratuity is calculated as follows:
(Last Drawn Wages/26*15) * Number of years of service.

The employee is eligible if he/she has rendered continuous service of 240 days for 5 years.

Regards,
Satpreet Kaur

Suppose his salary is 50KPM... = (50000/26*15)*5 = 48076.92308. Is this correct, or what is the correction? I heard that the formula is different. What is DA (Dearness Allowance)? I want to know how it is calculated. In salary slips also, it is not there.

Thanks,
Nag

An employee is eligible for gratuity if they have continuous service of 4 years and 8 months (240 days).

Gratuity Calculation Formula

Last Basic + DA
______________ X 15 X No. of Years of Service
        &n bsp;  26

Regards,
Zafar

Hello, sorry for interrupting, but I would like to know if a person has completed 4 years and 5 months, and if he/she gives resignation. According to the policy, he has to serve a three-month notice period, so in total, it becomes 4 years and 8 months. Now, is the person still eligible for Gratuity? I mean he has completed 4 years + 240 days, but including his notice period (3 months).

Eligibility for Gratuity Under the Gratuity Act 1972

If yes, then on what basis under the Gratuity Act 1972? Kindly guide on the same.

Regards,
Sangani

Gratuity Payment Conditions

Please note the following:

Gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years:

- (a) On his superannuation, or
- (b) On his retirement or resignation, or
- (c) On his death or disablement due to accident or disease:

Provided that the completion of continuous service of five years shall not be necessary where the termination of the employment of any employee is due to death or disablement.

Regards,
Abubakkar

Dear Sangani, please note the following:

Gratuity Eligibility Criteria

Gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years:
- (a) On his superannuation, or
- (b) On his retirement or resignation, or
- (c) On his death or disablement due to accident or disease.

Provided that the completion of continuous service of five years shall not be necessary where the termination of the employment of any employee is due to death or disablement.

Regards,
Abubakkar

Dear Sir, Gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years:
- (a) on his superannuation, or
- (b) on his retirement or resignation, or
- (c) on his death or disablement due to accident or disease.

Provided that the completion of continuous service of five years shall not be necessary where the termination of the employment of any employee is due to death or disablement.

Regards,
Abubakkar

Dear Sangani, please refer to Sec 4 under the Payment of Gratuity Act - 1972 Rules. It means an employee who has completed 5 years of continuous service is eligible for gratuity at the rate of 15 days' wages for every completed year of service or part thereof in excess of six months of service. Continuous service refers to an employee who has worked more than 240 working days in a calendar year. For a clearer understanding of continuous service, please review the contents under 25 B of the ID Act in Chapter VA or refer to Sec 79 and 80 for leave with holidays under the Factories Act - 1948, and also Sec 4b of the Gratuity Act.

Regards,
P.V. Rama Rao
[Phone Number Removed For Privacy Reasons].

During the notice period, he will also be serving the organization. Hence, we need to consider him on duty and include him when calculating 240 days in the fifth year for gratuity eligibility.

Regards,
Prakash

Thanks for your prompt response. Total 5 years are not required for gratuity. In fact, after continuous service of 4 years + 240 days, the employee becomes eligible for gratuity.

Eligibility for Gratuity

My question is, if a person has completed 4 years & 5 months and if he/she gives resignation, and according to policy, he has to serve a three-month notice, so in total, it becomes 4 years & 8 months. Now, is the person still eligible for gratuity?

Regards,
Sangani

Mr. Abubakkar and Mr. Rao are saying that he is not eligible as he must have completed 240 days in the 5th year. However, according to Mr. Prakash, the person is eligible. Anyway, I appreciate your courtesy. According to Mr. Rao, I'll go through the said sections for the respective Acts.

Thanks,

Regards,
Sangani