Hello all,
Adding to our friend's point, I would like to share the following:
Gratuity: Gratuity is the amount payable by the employer to the employee for his long and meritorious service in any company. Gratuity is payable under the Payment of Wages Act. It is calculated as follows:
Basic wages: Basic + DA + VDA
Last drawn salary: One month's salary, suppose if he worked only 6 days during the last month. Then we have to take the previous month's salary. Suppose if he worked less than 15 days, then we have to take the last six months' average salary.
Number of years of service: Total number of years of service from the present company. If he worked for two or more companies and the total number of years of service is 20, then we have to take the present company's total number of years of service only, say 10 years.
Gratuity: Last drawn salary x Number of years of service x 15/26.
One condition is he should have a minimum continuous year of service of 5 years. Minimum 240 days per year.
Suppose a person has worked for 10 years. But he has not worked 240 days for two years, then we need not pay gratuity for two years. But we have to prove that he has not worked for 240 days by giving a show cause notice and other relevant documents. Normally, the employer will not deduct gratuity for a particular year if he has not worked less than 240 days.
If a person has worked for 4 years and 10 months, then we have to see whether he has worked 240 days for the last year or not. Since 240 days in a year are defined in the Factories Act 1948.
I hope I made it clear all the doubts. Comments if any.
With regards,
K.V. Selvaraj.