Gratuity Calculation Confusion: Is It Based on Net or Gross Salary and Does Leave Count?

Gratuity Calculation Clarification

The payment for gratuity is calculated as follows: Gratuity = (Monthly salary/26) x 15 days x Number of years of service. I would like to know if the monthly salary being used in this calculation is the net or gross salary. Additionally, is leave also included in the calculation?

As Eswar said, gratuity is to be calculated on the wages at Basic + DA last drawn by the employee, i.e., drawn at the time of severance/termination of service, based on the formula mentioned by you.

Regards,
B. Saikumar
HR & Labour Law Advisor
Mumbai

If your company is not providing any DA, then you can calculate Gratuity on the following basis:

= Current/last drawn Basic/26 x 15 x No. of service.

Leave days will not be considered in the calculation.

Thanks,

Regards,
Brijesh Vishwakarma

However, leave availed with wages shall be included in the service for computing gratuity.

Regards,
B. Saikumar
HR & Labour Law Advisor
Mumbai