Re: How To Calculate Graduity - Doc Download

Hi Sir,

Please advise on how to calculate Gratuity.

Thanks,
Rekha Yadav

Hi,

Please note the formula:
Gratuity = Last drawn salary * (15/26) * Number of years of experience.

Dear Rekha,

Gratuity will be calculated only on Basic Salary (Basic + DA) and not on gross salary. Gratuity - Last drawn Basic Salary (Basic + DA) / 26 * 15 * Total number of years. Gratuity is normally calculated only for the person who had completed 5 years of service. There is a judgment from the Honorable Supreme Court that a person who had completed 4 years and 8 months is eligible for Gratuity, but this is applicable mostly where the employee has been terminated or laid off, and also he has to work for 240 days in each year. Even the resigned employee can also apply, but mostly it will be through legal proceedings. If the employee had worked for less than six months, the gratuity is calculated till the preceding year, and if the employee works for more than 6 months, then the gratuity has to be calculated for the full year.

For a deceased employee, there is no 5 years or 4 years and 240 days rule. If he has worked for more than 6 months, his family has to be given 1-year gratuity and so on.

Hi Sir,

Thank you for your reply. For example, if an employee has worked almost 4 years and 198 days (in the 5th year), are they eligible for gratuity?

Could you also confirm if you mentioned that "if the employee works for more than 6 months, then the gratuity has to be calculated for the full year," does this mean that an employee who has worked for almost 6 months in the company is eligible for gratuity?

Please confirm if the gratuity rule depends on the company or if it is the same for all companies.

Dear Rekha,

From your problem, it appears that the concerned employee has not completed five years of continuous service and hence he is not entitled to gratuity. But if he works for more than 240 days in the last year, he would be entitled to gratuity.

Hope this solves your problem.

Avinash Kanoray

Hi,

Please confirm if there is any form that the dependent has to fill out to claim Gratuity in case of an employee's death. Also, please confirm what formalities we need to complete if an employee passes away, and we need to close his file and provide all claims to his dependents.

Thank you.

Dear Experts,

Some of the companies deduct the gratuity amount from the monthly CTC. Is it correct? Could anyone please clarify the same?

Thanks to all,
Ram

Dear Ram,

It does not mean that they are deducting Gratuity from the CTC; they are showing their contributions towards Gratuity in CTC (Cost to the Company). When an employee is eligible to receive Gratuity, then this amount will be paid by the Employer.

Hi,

The correct formula for gratuity is: Basic + DA x number of years x 15/26.

Regards,
Chagi Manjunatha
9964694963

Respected fellow Members,

I am forwarding the Gratuity Rules, applications, calculations, and forms in the PDF attachment file.

Regards,
Ravi.V

Hello Sir,

My query is, suppose an employee has completed 10 years of service in an organization and left the job. Later, he rejoined after three months in the same organization. He has not withdrawn his gratuity or completed the full and final settlement, i.e., gratuity after leaving the job. We have to provide him with a new appointment from the date he rejoins with us. However, we want to continue him in our group gratuity scheme from his original date of appointment into the employment. His PF will be deducted from the new date of appointment. Is there any provision or solution for my query?

Regards, Manju