Seniors please let me know ,how we can calculate gratuity ,
From India, Rajkot
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From India, Rajkot
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Rajesh - you have lots of good explanations and some very good excel sheets.. i would recommend a search through keyword Gratuity
From India
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1From India
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simple formula for calculating gratuity is : last salary drawn divided by 26 multiplied by 15 and again multiplied by the number of years service.
From India, Bangalore
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From India, Bangalore
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Gratuity settlement amount would typically depend on the circumstances under which the withdrawal is made:
In the event of completion of a certain minimum tenure in the organization, it is calculated as shown below:
[15/26 times text{No. of Years of service (to be rounded to the nearest integer)} times text{Last drawn Basic Salary.}]
For example, if Mr. John has served for 67 months and his last drawn Basic Salary amounted to INR. 20,000, the calculation would be:
[15/26 times 6 times 20,000.]
In the event of the decease of the employee:
[15/26 times text{No. of Years Left of service (to be rounded to the nearest integer)} times text{Last drawn Basic Salary.}]
For instance, if Mr. John works for three years followed by untimely decease and his Last Drawn Basic Salary amounted to INR. 20,000, the calculation would be:
At the time of Death, assuming an age of 35 years, the Service Provider will compute gratuity for the remaining service period.
Thus, (58 (assuming Superannuation Age) - 35 (Current Age) = (23 years left of service + 3 years of service rendered) times 15/26 times 20,000.)
Hope this Helps.
From India, Delhi
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In the event of completion of a certain minimum tenure in the organization, it is calculated as shown below:
[15/26 times text{No. of Years of service (to be rounded to the nearest integer)} times text{Last drawn Basic Salary.}]
For example, if Mr. John has served for 67 months and his last drawn Basic Salary amounted to INR. 20,000, the calculation would be:
[15/26 times 6 times 20,000.]
In the event of the decease of the employee:
[15/26 times text{No. of Years Left of service (to be rounded to the nearest integer)} times text{Last drawn Basic Salary.}]
For instance, if Mr. John works for three years followed by untimely decease and his Last Drawn Basic Salary amounted to INR. 20,000, the calculation would be:
At the time of Death, assuming an age of 35 years, the Service Provider will compute gratuity for the remaining service period.
Thus, (58 (assuming Superannuation Age) - 35 (Current Age) = (23 years left of service + 3 years of service rendered) times 15/26 times 20,000.)
Hope this Helps.
From India, Delhi
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Can you detail the gratuity calculation in case of the death of an employee while in service? I have not seen such a provision in the Payment of Gratuity Act. The Act only states that if an employee dies, they shall be given gratuity without considering whether they have completed five years of continuous service or not. This means that if an employee dies after completing only 3 years, their legal representative should be paid gratuity even though the employee had not completed five years of service, and the amount of gratuity shall be calculated in the same manner when it becomes due in other cases. There is no mention of the remaining years of service under the Payment of Gratuity Act. Of course, there may be companies that have adopted such a formula for the calculation of gratuity, and it is purely their internal matter.
Regards,
Madhu.T.K
From India, Kannur
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Regards,
Madhu.T.K
From India, Kannur
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simple formula helps me alot to calculate gratuity..please let me know after how much period of service we can provide gratuity to the employee...
From India, Delhi
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From India, Delhi
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Dear Member,
If you want to give a gratuity amount that is over and above the Payment of Gratuity Act, then you can pay gratuity for any period of service.
With Regards,
R.N. Khola
"Simple formula helps me a lot to calculate gratuity. Please let me know after how much period of service we can provide gratuity to the employee."
From India, Delhi
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If you want to give a gratuity amount that is over and above the Payment of Gratuity Act, then you can pay gratuity for any period of service.
With Regards,
R.N. Khola
"Simple formula helps me a lot to calculate gratuity. Please let me know after how much period of service we can provide gratuity to the employee."
From India, Delhi
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To arrive one day wages ,Last drawn wages/26 To arrive yearly gratuity,Multiply by 15 To arrive gratuity for total years of service,multiply by No. of years of service. Thanks N Kannabiran
From India, Madras
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From India, Madras
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actually i want to know that why we divide the last drawn salary with 26 and then multiply with 15. what is the logic behind that?
From India, Chandigarh
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From India, Chandigarh
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We divide the monthly salary by 26 in order to get the daily average salary. It is more beneficial for employees when the daily wage is arrived at after dividing the monthly salary by 26 rather than 30. The Act has provided for 26 as the divisor.
Regards,
Madhu.T.K
From India, Kannur
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Regards,
Madhu.T.K
From India, Kannur
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Dear All,
The possible explanation for *15 & /26 can be given thus. The Payment of Gratuity Act, 1972 provides for payment of gratuity at half month's salary for every year of services rendered. The minimum service requirement for eligibility for gratuity payment is 4 years, six months, and two days. Six months and two days are rounded off to one full year, completing 5 years.
Recently, a high court, most probably the Tamil Nadu High Court, had given a verdict to this effect. There are no separate formulas for the calculation of gratuity for retirement, resignation, and death. Some employers offer higher gratuity in death cases. An employer may offer gratuity higher than Rs.10 lakh (from 24/05/2010), but the amount exceeding Rs.10 lakh would be taxable.
Important note: An employee dismissed from service on account of misconduct loses the right to receive gratuity from their employer.
Shyam Agrawal
From India, Pune
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The possible explanation for *15 & /26 can be given thus. The Payment of Gratuity Act, 1972 provides for payment of gratuity at half month's salary for every year of services rendered. The minimum service requirement for eligibility for gratuity payment is 4 years, six months, and two days. Six months and two days are rounded off to one full year, completing 5 years.
Recently, a high court, most probably the Tamil Nadu High Court, had given a verdict to this effect. There are no separate formulas for the calculation of gratuity for retirement, resignation, and death. Some employers offer higher gratuity in death cases. An employer may offer gratuity higher than Rs.10 lakh (from 24/05/2010), but the amount exceeding Rs.10 lakh would be taxable.
Important note: An employee dismissed from service on account of misconduct loses the right to receive gratuity from their employer.
Shyam Agrawal
From India, Pune
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The Madras High Court verdict in Mettur Beardsell Ltd, Madras Vs Regional Labour Commissioner (not a recent one but a verdict which came in 1996) states that an employee who has worked at least for 240 days (not six months and two days) in the fifth year is eligible to receive gratuity. However, since this is a ruling by a High Court, it may not be mandatory to implement in other states. Similarly, there has been no amendment made to the Payment of Gratuity Act following this verdict. Nevertheless, many decisions have been made by the payment of gratuity authorities in different states, in line with the Madras High Court verdict, allowing gratuity for employees who have worked for four years and 240 days.
Regards, Madhu.T.K
From India, Kannur
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Regards, Madhu.T.K
From India, Kannur
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Payment of Gratuity Act, 1972 & The Rules.ppt
THE PAYMENT OF GRATUITY ACT 1972.doc