Gratuity Calculation Under Delhi Shop Act: How Much Is Owed for 14 Years of Service?

soman.noida
An employee has been working in a shop under the Delhi Shop Act for 10 years. His salary is ₹40,000, and his basic pay is ₹22,000.

The shop had 9 employees until 2004, and from 2006 onwards, the number of employees increased to more than 10.

Gratuity Calculation

How much would his gratuity be as of April 30, 2014? His date of joining is April 1, 2000.

Thank you all.
umakanthan53
You have not provided the breakdown of the individual's gross salary. Since it is mentioned that Rs. 22,000.00 is his basic salary, the remaining amount is presumed to be allowances. Any allowance other than D.A. cannot be considered for the calculation of gratuity. This implies that there is no D.A. in the wage structure, making his last-drawn wage Rs. 22,000.00 per month.

Though the Act only became applicable to the establishment since 2006 when the number of employees increased to 10, any subsequent termination of employees' services makes them eligible to claim gratuity from their original date of employment, even if it predates 2006.

Gratuity Calculation Formula

The formula for gratuity is: Last-drawn wages (only basic + D.A.) x 15 x Number of years of completed service divided by 26.

Based on your details - the total number of completed years of service as of 30-04-2014 is 14 years, with a last-drawn wage of Rs. 22,000.00 per month. Therefore, the individual's gratuity is calculated as: 22000 x 15 x 14 divided by 26 = Rs. 1,77,692.30 or Rs. 1,77,692.00.

Gratuity should be paid within 30 days of termination. In case of any disputes, the amount must be deposited with the Controlling Authority for the area to avoid interest charges.

Regards.
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