Gratuity Calculator: How Can We Improve Its Accuracy and Usability?

I have prepared a calculator for calculating gratuity. Your suggestions are welcome for any modifications.

Revised Gratuity Calculator Update

Kindly ignore the earlier attachment and please consider the revised one. Sorry for the inconvenience caused. The attached calculator calculates gratuity only for completed years of service. If a person works for 240 days in the last year, then that should be considered a completed year. For example, if a person works for 4 years and 240 days of the 5th year, then his total working period should be considered as 5 years.

In the calculation of continuous service, consider actual working days, weekly offs, compensatory offs, paid holidays, and paid leaves.

Regards,

One completed calendar year as per the Payment of Gratuity Act equals 240 days of working (Actual working + Weekly Offs + Compensatory Offs + Paid Holiday + Paid Leaves).

Definition of a Calendar Year

A calendar year means the year starting on the 1st day of January and ending on the 31st of December in any year.

Dear Suhas Khambe ji, as per the provisions of The Payment of Gratuity Act, if a worker has worked more than six months (even a single day) in a calendar year, then it will be treated as one year. I think the 240 days condition is not valid. Though your sincere efforts are really excellent.

Regards,
Lokesh C. Sharma
Sr. HR Professional

I feel that the explanation of continuous service with a condition of 190 days or 240 days has been given in the context of interrupted service in the form of a strike, layoff, etc., and not for counting the total number of years of eligible service for the first five years. In any case, the person has to complete five years of service, i.e., from the date of joining to the date of separation, except in the case of death, to be eligible for gratuity. The completed year of service has been reckoned for the period of service of more than six months in the last year of service. The calculation for persons employed in a seasoned industry also differs.

Hence, the calculations need a review.

Regards

Dear Mr. Lokesh Sharma,

There has been a debate on this site regarding whether 6 months should be considered a completed year or not. There should be written evidence for this purpose. Kindly provide a copy of any GR or case law where judgment has been given that 4 years and 6 months are considered for the payment of gratuity. Your help in this regard will be very useful to us.

Regards,
Lokesh C. Sharma
Sr. HR Professional

If an employee goes on leave without pay with approval, then these days are deducted from their actual working days. With reference to case laws, if an employee goes on unpaid leave, then these days are deducted. After deduction, if their service is 240 days in a year, then that year is considered for calculation.

Regards

Please refer to section 4(2) of the Payment of Gratuity Act, 1972, which states that for every completed year of service or part thereof in excess of six months, the employer shall pay gratuity to an employee at the rate of 15 days' wages based on the rate of wages last drawn by the employee concerned.

I hope your query is clarified now. No GR or case law is required.

Regards

Dear Mr. Premkumar Nair Ji,

Thank you for your valuable reply. My query has been satisfied with your answer. Actually, I was seeking this kind of solution. In the case of a calculator in Excel, I have left a margin for manually entering years. So, the calculator is still useful. Please refer to the second attachment.

Regards

Your efforts are commendable but should be calculated by considering the 6-month condition as provided in the Gratuity Act.

Regards,
(J.S. Walia)

Dear Mr. J. S. Walia Ji,

As per the logic provided by Mr. Premkumar Nair Sir and with legal evidence, I now have no problems in calculating gratuity on a 6-month basis. However, I have another query. If a person joins on 19th October 2004, then how should the completed years of service be calculated on a six-month basis?

Any help in this regard will be very useful to me.

Regards,
[Name Removed For Privacy Reasons]

If the date of joining is 19.10.2004 and the date of retirement is 31/03/2013, then the length of service will be 8 years, 7 months, and 13 days, which will be considered as 9 years of complete service.

It is quite simple. Calculate completed years from 19.10.2004 to 18.10.2012, i.e., 8 years. Then calculate completed months from 19.10.2012 to 18.03.2013, i.e., five months. Hence, gratuity for 8 years for service up to 31.03.2013. Hope it clarifies.

Regards.