How Do We Calculate Gratuity for an Injured Employee with 3+ Years of Service?

Please let me know, one of the employees is working in the factory. He has been in service for 3 years and 4 months. Unfortunately, he had an accident inside the factory and, as a result, he is unable to continue working. We need to provide him with a final settlement.

Gratuity Calculation

My question is: how do we calculate the gratuity for him? His basic salary is Rs 9000, and he receives Rs 4000 as DA. Is there a specific formula or method for calculating gratuity?

Thanks & Regards,
Hekarthi

Gratuity Entitlement for Permanently Disabled Employee

If he has been permanently disabled due to an accident, he is entitled to receive gratuity. If you have linked your gratuity scheme to LIC, then LIC will pay the amount calculated based on the retirement age. If not, you have to pay gratuity for three years, and the amount comes to Rs 22,500 (13000/26 x 15 x 3).

Regards,
Madhu.T.K

Dear Madhu Ji, Please clarify another doubt. If an employee worked for 6 years and 5 months before resigning, and they were on a piece-rate wage, how should the gratuity be calculated?

Salary Details for the Last Year

2012
- July: 5000
- August: 4430
- September: 3000
- October: 5000
- November: 2400
- December: 6300

2013
- January: 6700
- February: 5050
- March: 2950
- April: 3750
- May: 5000
- June: 4050

Please provide your opinion on this matter.

Thanks and Regards,
hekarthik

I would suggest that you pay the gratuity based on your current minimum wages. Determine the skill level according to the latest gazette and compensate your employees accordingly. By doing so, you can avoid any potential issues that may arise from employment matters and ensure that you are on the safe side.

Thank you

Gratuity Calculation Guidelines

For the calculation of gratuity, the previous year's salary is not relevant; what matters is the last drawn salary. However, for piece-rated workers, the average wages for the last three months immediately preceding the date of exit should be taken into account. In the case of seasonal employees, it will be 7 days' wages for each season as opposed to 15 days' wages for every completed year of service.

Regards,
Madhu.T.K