Is My Former Employee Eligible for Gratuity After 14 Years of Service? Seeking Advice on Calculation

Hi All, My staff has 14 years of service in a private institution. He left the institution long ago. Now, he is asking for a gratuity amount. Can you provide insights on whether he is eligible for gratuity and the calculation for the above service?

Regards, S. Lavanya

Fourteen years of service make an employee eligible for gratuity. The employee should apply for gratuity within 30 days from the date of their relieving. However, an employer is not allowed to reject an application from the employee after the expiry of 30 days if the delay is due to a valid cause. The rules also suggest that no claim for gratuity shall be regarded as invalid simply because the individual did not file their application during the specified period.

Yes, your staff is eligible for gratuity. The Gratuity Act of 1972 is a central legislation that provides for the payment of gratuity to employees who have rendered continuous service for at least five years in any establishment.

Gratuity Calculation

The gratuity amount is calculated as follows:

1. The last drawn salary is the basic salary plus dearness allowance and any other allowances that are admissible under the Payment of Gratuity Act, 1972.
2. Tenure of service is the total number of years of service, including the fraction of a year. If the employee has worked for more than six months in a year, then the entire year is counted as a year of service.
3. 26 is the number of working days in a month.

The maximum gratuity amount that can be paid is Rs. 20 lakhs. Any amount above Rs. 20 lakhs will be treated as an ex-gratia payment.