Gratuity Increase for Central Govt Employees: How Does the New Rs. 20 Lakh Ceiling Affect You?

Friends,

Please find attached the notification dated 4.8.2016 accepting various recommendations of the Seventh Pay Commission, including the enhancement in the ceiling of gratuity for Central Government employees from Rs. 10 lakhs to Rs. 20 lakhs.

Thanks

I am working in a private textile company since 2009. Now, I am going to resign from my job. Therefore, I request you to clarify if I am eligible for gratuity, how it is calculated, and how much I am eligible for in terms of gratuity or other benefits. Please reply to me.

Hi Aruna Nataraj,

You are very much eligible for gratuity. Gratuity is calculated based on your last drawn salary and the number of years you have worked with the company without any break in service. The formula is 15 days' salary for each completed year of service.

In your case, assuming your salary is Rs. 26,000, your per day salary is Rs. 1,000, and your gratuity will be 7 x 15 x 1000. (Seven completed years multiplied by 15 days' wages multiplied by the per day wage).

Hope this is clear now.

Dear all,

I believe gratuity should be calculated based on an employee's basic salary plus DA. For example, if the gross salary is 26K and the Basic+DA amounts to 18K, then gratuity will be calculated only on the 18K amount:

18000/26*15*7=65172

Yes, Mannu, you are right. Gratuity is based on the applicable basic salary plus DA.

Regards,
Rameshan PT