Gratuity Eligibility with a Consolidated Salary: How Do We Calculate It Without Basic + DA?

Gratuity Eligibility and Calculation

An employee is receiving a consolidated salary of 27,000. Is he eligible for gratuity, and how do we calculate it? The salary is not divided into Basic + DA. How should we proceed? Please help me.

Dear Selvaraj, though the last drawn salary is an important factor for the calculation of the statutory gratuity payable to an employee on the termination of his employment, neither the mode of its payment nor its constitution, like consolidated or componential structure, plays any role in the determination of his eligibility for gratuity under the PG Act 1972.

On the contrary, in the case of a consolidated salary/wages, the entire sum would be taken into account for the purpose of the calculation of gratuity under the Act. If it comprises several components like basic, dearness allowance, and other allowances, only the sum of basic and D.A would be taken into account.

In the absence of any specific bifurcation, the whole salary will qualify for gratuity. If you receive a consolidated salary, the entire sum will qualify for deduction if you take a leave without pay. Many companies follow a pattern with Basic, DA, etc., but the entire sum will qualify for deduction in the case of leave without pay. In such circumstances, my opinion is that you should demand gratuity on the whole salary.