Gratuity Calculation Confusion: Should I Use 30-31 Days or 26 Days for Working Days Count?

In my organization, the salary is calculated on a 30-31 day basis. In the gratuity calculation formula, the base days are taken as 26. Now, if I have to calculate the number of days an employee has worked during a year, should it be based on the number of days salary is made (30-31 format) or on the basis of 26 days? If I have to follow the 26 days format, do I have to exclude or include holidays in the count of working days?

Dear Kriti, For the gratuity calculation, every month is considered to be 26 days for organizations incorporated under the Gratuity Act 1972. Gratuity is paid for every 15 days for every completed year of service. In the last year of employment, if an employee serves for more than six months, it will be rounded off to the next number.

Gratuity is dependent upon the total number of years served in the company and the last drawn salary. The formula for calculating gratuity is: Gratuity = A * B * 15 / 26 (15 being wages for 15 days and 26 being the days of the month).

Thanks for your replies. What I'm asking is, suppose an employee is frequently on leave in their fifth year of service, which will be their last year of working. It can be medical or any other leaves or LOP. So if I have to count the number of working days in the fifth year, what base should I take? Should we count the number of days for which their salary was made or a 26-days format?

Counting Working Days in the Fifth Year

This problem arises when the employees are in their fifth year of service and they leave the service in that fifth year itself. As far as I know, all sanctioned leaves like EL, CL, SL, weekly off, and holidays are counted for the calculation of days. I'm not clear on LOPs, though. Correct me if I'm wrong somewhere.

Thanks

I think you are seeing this the wrong way. The employee must be employed without a break in service. If that is established, then how many days he actually worked and how many days of leave he took, and whether it was a 5-day week or 6-day week is immaterial. As long as there was no service break (and he could even be on leave without pay, it will still not be a service break), he is entitled to gratuity for that year also.

Computation of Gratuity
The SC order says that in the computation of Gratuity, you need to work out the daily wage rate by dividing the monthly salary by 26 and then multiplying it by 15 and the number of years worked.

Thank you for the feedback provided to seniors. One more thing, is an employee eligible for gratuity after completing 4.5 years, or does he have to complete the full five years?

Hi, A continuous service period of 5 years is a requirement for Gratuity.