Confused About Gratuity Calculation After 21 Years of Service – Can Anyone Clarify?

Dear Professionals,

I am P.T. NAIDU, working for a Private Limited company in Hyderabad. I am going to resign from my position very soon. Before that, I would like to know how much Gratuity fund I will receive. My length of service is 20 years and 9 months, which can be rounded up to 21 years. My basic salary was 16,000/- per month.

To the best of my knowledge, I believe I will receive the following amount: 16,000/26 days X 15 days X 21 years = 193,846/-.

However, a colleague who recently joined us mentioned another point. If an employee completes more than 15 years of service in the same organization, the company is obligated to pay one month's full BASIC+ DA per year. This calculation would be as follows: 16,000 X 21 Years = 336,000/-.

Is this information true or false? I kindly request all the professionals here to confirm the actual regulations and provide me with a copy of the justification or Government Order.

Thank you in advance to everyone.

P.T. NAIDU
[Email Removed For Privacy Reasons]

As per your calculation, the value of Gratuity is correct, provided you have considered the wages as per the definition provided under section 2(s) of the Payment of Gratuity Act.

Apart from this, there is no such rule as what your friend has highlighted so far as the Payment of Gratuity Act is concerned. Though you may please check your company's policy or the standing order or any agreement in this respect between the employee and the employer or any company's circular; if this is the case, then for sure, the Gratuity value is higher than the usual course. Under section 4, sub-section 5 of the Payment of Gratuity Act, the employee is eligible to get the higher amount of Gratuity.