Gratuity After Retirement: Can Re-employed Workers Earn It Again?

Gratuity Entitlement for Re-employed Employees

The employees who have completed their services with the organization and attained the age of superannuation have received Gratuity up to the maximum ceiling, i.e., Rs 20 Lakhs.

Again, after completing their services, if they join as re-employed anywhere and complete another 5 years, would they be entitled to receive Gratuity from that employer?

If yes, kindly explain under which provision of the Gratuity Act or any decision given by the Supreme Court of India. Kindly help me, please.

Gratuity Eligibility for Re-employed Individuals

The employees who have completed their services with the organization and attained the age of superannuation have received the Gratuity up to the maximum ceiling, i.e., Rs 20 Lakhs.

Re-employment and Gratuity Entitlement

Again, after completing their services, if they rejoin as re-employed anywhere and complete another 5 years, would they be entitled to receive Gratuity from that employer?

If yes, kindly explain under which provision of the Gratuity Act or any decision given by the Supreme Court of India. Kindly help me, please.

Maximum Tax-Free Gratuity

The maximum tax-free gratuity is Rs 20 Lakhs. In the next organization, if an employee works for five years and draws gratuity, they will have to pay tax on the full amount.

Gratuity Calculation for Employees Covered Under the Act

For employees covered under the Act, there is a formula used to calculate the amount of gratuity payable. The formula is based on 15 days of the last drawn salary for each completed year of service or part thereof in excess of six months. The formula is as follows: (15 x last drawn salary x tenure of working) divided by 26.

Gratuity Calculation for Employees Not Covered Under the Act

For employees not covered under the Act, there is no law that restricts an employer from paying gratuity to their employees even if the organization is not covered under the Act. The amount of gratuity payable to the employee can be calculated based on half a month's salary for each completed year. Here also, salary is inclusive of basic, dearness allowance, and commission based on sales. The formula is as follows: (15 x last drawn salary x tenure of working) / 30.

I hope this is clear.