Understanding Gratuity Calculation, Eligibility Criteria, and Legal Framework

Anyone can tell me, what is the percentage of gratuity, and how can we calculate it?

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Hi Tanaji,

Calculation of Gratuity is as follows: Last drawn basic salary X 15/26 X number of years with the company. This calculation is subject to eligibility criteria being satisfied.

Thanks,
Meraj

Hello,

Some benevolent companies prefer 30 days of basic wage for every completed year of service. In terms of various judgments of the Supreme Court, anyone who has completed more than 180 days of continuous work is eligible for that year's gratuity.

Please also refer to the relevant section of the Income Tax Act, as the amount of gratuity tax-free is restricted to 10 months' pay or Rs. 3,50,000, whichever is lower.

Regards :)

Hi,

Let me also add something; an employee who worked for 4 years and a few months may also be eligible for gratuity if, in the last year, he/she has worked for 240 days. This means that if an employee has worked for 4 years and 8 months and was present for 240 days in the last year, he/she is eligible for gratuity. Gratuity may also be withdrawn by the employer if the employee was terminated due to the main reason being his conduct or obstructive behavior.

Warm regards,
Umesh Chaudhary
(welcomeumesh@yahoo.com)

Hi Abhiritu,

I would appreciate it if you could forward a copy or reference case of the Supreme Court Judgment on the 180 days continuous work leading to eligibility for that year's Gratuity. I'd like to study the same.

The criteria for the definition of the period of continuous work for the determination of Gratuity are 180 and 240 days. I suppose the 180 days criterion is only for a certain class of establishment (Mines, etc.) and not general establishments.

Please correct me if I am wrong.

Meraj