After 18 Years, My Company Let Me Go Due to High Salary – How Do I Calculate My Gratuity?

I have worked in a big concern as an office manager for 18 years (100+ staff). After 18 years, they have asked me to leave the service since my salary is high. What is my gratuity eligibility in this case of termination?

Gratuity Calculation Options

a) 18 X 15 days / 26 days salary (basic + DA)
b) 18 X 30 days / 26 days salary (basic + DA + special allowance, etc.)
c) 15* X 30 days / 26 days salary (basic + DA + special allowance, etc.)

Kindly confirm. My friend told me I would be eligible for a full salary (30 days/year) since I have worked 10+ years and the employer is terminating me. My basic is 20,000 + DA 0 + other allowances 30,000 = 50,000. They put only basic and other allowance (they don't include DA, HRA breakup only to avoid calculations). Kindly guide me.

See more at: Gratuity Payable only if employee put in 5 years of service – HC

Regards.

If you are above 18 years, the gratuity formula remains the same for both scenarios.

Gratuity Formula

The formula is as follows:
(last drawn Basic + DA) * 15/26 * number of years of service

Thank you.

I have gone through the link in the post. I do not see any relevance of the case with your present problem. Your problem is whether you should get 15 days or 30 days per year worked and whether you should get 18 years or 15 years credit (I do not know why it's 15 years). The case you have stated is only concerned with whether the concerned person was or was not employed with the company.

So what is the problem actually? And where did you get the idea that you can get gratuity of 30 days per year worked?

Gratuity Calculation Based on Salary

You will be entitled to gratuity based on your salary divided by 26, multiplied by 15, and then by 18 (years). Salary in this context refers to the basic pay and dearness allowance (DA).

Regards

I have gone through your case and found that there is no dispute per se as far as Gratuity under the Payment of Gratuity Act, 1972 is concerned. Here in the instant case, you have completed 18 years of service. Keeping in mind the provisions of the Act, you are eligible for Gratuity for 18 years of service based on the following formula:

Salary x 15 days x 18 years of completed years of service / 26
Salary = Basic Salary plus D.A.

Since you have been terminated, you are eligible for notice salary as per the terms of service. If nothing is mentioned in the appointment letter, you are eligible for 1 month's salary for the notice period.

Regards,

Dear Madeshwaran,

Gratuity Eligibility Calculation

The gratuity eligibility is calculated as (Basic + DA) * 15/26 * number of years of completed service, subject to a maximum limit of Rs. 10,00,000/- or the actual amount, whichever is lower. The only variable is the number of years. If you have completed 18 years and 6 months, it would be calculated as 19 years; otherwise, it would be 18 years. The inclusion of a special allowance in the gratuity is not allowed, and any other calculation formula is not applicable. Therefore, based on your input, the gratuity calculated will be:

20,000 * (15/26) * 18 = Rs. 2,07,962/-

Regards,
Ashutosh Thakre