Gratuity Calculation Confusion: Should It Be 15/23 for a 5-Day Workweek?

I have a doubt in the 15/26 gratuity calculation where 26 is the number of working days in a month, leaving 4 Sundays. However, if a person is working for an organization that operates only five days a week, should the calculation be 15/23 or will it still be 15/26.

Dear Snejay11,

In the explanation of rule 6, it is stated that in the case of a monthly-rated employee, the fifteen days' wages shall be calculated by dividing the monthly rate of wages last drawn by him by twenty-six and multiplying the quotient by fifteen. So, whether you have 5 days working or 6 days, the dividing factor is 26 only. If you want to have the dividing factor as 23, no one can object to you. You can give anything more than the law.

Why divide by 23 only? If your management permits, you can provide a 30-day gratuity payment for each completed year of service instead of 15 days, subject to a maximum amount of Rs. 20 lakhs (any amount above this is taxable). No law will prevent you from implementing such "welfare."

You may also suggest or recommend to the Government of India to amend separate rules for industries that operate on a 5-day workweek.

I appreciate Mr. Korgaonkar's comment on this.

Suresh

It is to be noted that quite some time back, the Hon'ble Supreme Court held that for Gratuity calculation purposes, the denominator is always 26. Even LIC group gratuity also calculates by taking the denominator as 26 whether the employees work for 23 or 24 days.

There should be a single line break between the two paragraphs for better readability.