Gratuity Calculation for Daily-Rated Workers: How Many Days Count as a Service Year?

Gratuity Calculation for Daily-Rated Workers

Kindly tell me, in Gratuity Calculation, how many days are considered for one service year for a daily-rated (wage) worker.

Regards,
Kausik

Gratuity is paid for good service and gratitude. It is a benefit provided to any employee completing 5 years of continuous service, which cannot be adjusted against any dues.

If an employee has completed 5 years of continuous service in an establishment, they are eligible for gratuity. The entitlement is 15 days' salary for each completed year of service or part thereof. The salary is calculated as Basic Salary + D.A.

According to the Payment of Gratuity Act, 1972, the amount of gratuity should be calculated using the following formula: Salary x Number of completed years of service x 15/26.

This is the concept of gratuity.

Thank you.

My question is for daily-rated workers: how many working days in a particular year should be considered as a year of service?

If a daily-rated employee has completed 5 years of continuous service in the facility or in the case of death, then he is eligible for Gratuity irrespective of whether he is monthly paid or daily paid.

Gratuity Calculation for Daily-Paid Employees

For daily-paid employees, gratuity can be calculated as follows: Gratuity = (Daily rate of wages x 15 days) x Number of years worked in the entity.

Hourly Basic Rate of Pay for Daily-Rated Employees

For a daily-rated employee, his hourly basic rate of pay is computed as follows:

Daily Pay at the Basic Rate
-------------------------------------------
Working Hours Per Day

Hope this will solve your query.

For a daily-rated employee, 240 working days will constitute one year of service. These 240 days are inclusive of any holiday payment given to the employee.

Regards,
Madhu.T.K

This 240 days is inclusive of all admissible leaves taken by the employee. That means all PAID LEAVES and ESI leaves should be included in the days worked. If the actual physical working days are 220 but there were some 5 days of ESI leave due to accidents and 15 days of other sick and casual leave, then he is still considered to have continuous service for the purpose of gratuity.

Madhu.T.K