Understanding Gratuity: How Do Calculations Differ Between Service and Manufacturing Industries?

Can anybody help me with the concept of gratuity? Also, I want to know the calculation of gratuity. Does the calculation remain the same for the service industry and the manufacturing industry?

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Gratuity Calculations

As for your query about gratuity calculations, it is 15 days' salary for every year of service rendered. Please note that although a person is eligible to claim the gratuity amount only after serving a minimum period of 5 years (except in cases of death or disablement), the employer is supposed to credit the gratuity amount year on year in an account. Gratuity is a safe and compulsory due on the employer to be given to the employee. Gratuity cannot be withheld except in certain situations as prescribed by the Gratuity Act.

The calculation is 15/26 * (Last drawn salary) * No. of years served.

Rounding Off Service Tenure

Note that after 5 years of service is rendered, we can thereafter round the service tenure to the nearest decimal by:

- If the person serves for up to 6 months, the years are rounded to a lower number (i.e., 5.5 years is rounded to 5 years).
- If the person serves more than 6 months, years are rounded to the upper number (i.e., 5.7 years is rounded to 6 years).

You can read further on:

1) https://www.citehr.com/445131-gratui...ice-years.html

2) https://www.citehr.com/166761-gratui...ic-salary.html

3) https://www.citehr.com/235334-confus...lculation.html

4) https://www.citehr.com/330656-need-i...nd-amount.html

Hope this will help you.

Regards

My father is a government bus driver. He has served for 28 years, and his last drawn salary was 18,000.

15/26 * 18,000 * 28 = 290,769. May I know if this is correct?

According to me, the ideal calculation of gratuity is 15 * Average of the last 3 months' basic salary * Number of years of service / 26.

Thank you.

Just for your information, if an employee continues to work in the same organization for more than 4.8 or 5 years, then they are eligible for gratuity. The gratuity calculation is done as follows: current basic/26*15*number of years. The gratuity amount limit is 10 lakh.

Thanks and Regards,
Mahendra Patole

As per the experts' view, it is ideal to count the average of the last 3 months. Also, the gratuity amount limit is ₹10 lakh.

Thank you.

My father is a government bus driver. He has served for 28 years, and his last drawn salary was Rs. 18,000.

15/26 * 18000 * 28 = 290,769. May I know if this calculation is correct?

Gratuity Calculation Confirmation

First, confirm his last drawn basic salary is Rs. 18,000. Then calculate as follows: Current basic / 26 * 15 * number of years.

Regards, Mano

Is it compulsory to complete 240 physical present days each year while calculating gratuity?

I don't think so. You have to complete a minimum of 5 years in an organization, and then you are eligible for gratuity.

Thank you.

I have seen the calculation of the Gratuity amount, but there may be a difference in the Government amount. Can you advise me on whether it is correct or not?

Dear Yoghitha,

Gratuity Calculation

The calculation of gratuity is as per the law as follows: Basic Salary X No. of years of Service X 15 / 26.

You could calculate as per the above.

Regards, Surendra Shekhawat

Gratuity Eligibility

• Any person employed on wages/salary.
• At the time of retirement, resignation, or superannuation, an employee should have rendered continuous service of not less than five years.
• Payable without completion of five years only in the event of death or disablement.

This gratuity calculator is applicable only to an Indian employee.

Gratuity Calculation in India

Gratuity Calculation in India = [(Basic Pay + D.A) x 15 days x No. of years of service] / 26