Hi,
If a person has completed 5 years in a company, the appraisal cycle is from JULY to JUNE, meaning they receive an incremented basic salary in JULY. If the person resigns in AUGUST 2016, which basic salary will be used to calculate the gratuity? Will it be the incremented basic salary in JULY 2016 or the previous basic salary up to JUNE 2016?
From India, Mumbai
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If a person has completed 5 years in a company, the appraisal cycle is from JULY to JUNE, meaning they receive an incremented basic salary in JULY. If the person resigns in AUGUST 2016, which basic salary will be used to calculate the gratuity? Will it be the incremented basic salary in JULY 2016 or the previous basic salary up to JUNE 2016?
From India, Mumbai
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Salary for the purpose of calculation of Gratuity will always be the salary drawn just preceding the date of leaving. Therefore, if he has drawn an incremented salary for at least a day, the same will be the base for the calculation of his gratuity. To be more specific, if he has received an increment in July and he leaves the service in August, he will get gratuity based on his July salary.
Madhu.T.K
From India, Kannur
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4526Madhu.T.K
From India, Kannur
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Always the last Basic Salary will be consider for the Gratuity and it will be calculated as 60% of that.
From India, Hyderabad
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From India, Hyderabad
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Understanding Basic Salary and Its Role in Salary Structure
Regret to say that there is no rule which states that the basic salary must be 60% of the gross salary. Instead, it should serve as the base of the salary on which other components like HRA, DA, etc., are calculated and given. Moreover, salary means the amount agreed upon as payable to the employee in return for the labor the employer receives. It is for the convenience of the employer (to avoid or reduce liabilities towards certain mandatory contributions like PF, Bonus, etc.) that the basic salary is often set at a lower rate. Even the special allowance (not the dearness allowance or the special allowance under the Maharashtra Minimum Wages notification, which is part of statutory salary and will attract Bonus and Gratuity) that is paid commonly to all employees should be considered as part of the salary for the purpose of calculating gratuity, bonus, or PF.
It is a commonly accepted practice that these statutory contributions or payments are based on basic salary and dearness allowance. There has been a misinterpretation of salary as basic salary due to the emergence of the CTC structure and new establishments forming a new salary structure with a lesser amount as basic salary and higher amounts of allowances such as HRA, conveyance, and even washing allowances.
Regards, Madhu.T.K
From India, Kannur
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Regret to say that there is no rule which states that the basic salary must be 60% of the gross salary. Instead, it should serve as the base of the salary on which other components like HRA, DA, etc., are calculated and given. Moreover, salary means the amount agreed upon as payable to the employee in return for the labor the employer receives. It is for the convenience of the employer (to avoid or reduce liabilities towards certain mandatory contributions like PF, Bonus, etc.) that the basic salary is often set at a lower rate. Even the special allowance (not the dearness allowance or the special allowance under the Maharashtra Minimum Wages notification, which is part of statutory salary and will attract Bonus and Gratuity) that is paid commonly to all employees should be considered as part of the salary for the purpose of calculating gratuity, bonus, or PF.
It is a commonly accepted practice that these statutory contributions or payments are based on basic salary and dearness allowance. There has been a misinterpretation of salary as basic salary due to the emergence of the CTC structure and new establishments forming a new salary structure with a lesser amount as basic salary and higher amounts of allowances such as HRA, conveyance, and even washing allowances.
Regards, Madhu.T.K
From India, Kannur
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Gratuity is to be calculated on the last drawn wages. Wages include basic and DA, while HRA/bonus, etc., are excluded. There is no concept of 60%. Please check section 2(s) of the Payment of Gratuity Act.
Visit www.labourlawhub.com for more information.
From India, Kolkata
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Visit www.labourlawhub.com for more information.
From India, Kolkata
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Gratuity Calculation:
[ text {Gratuity Calculation} = left[ left( text{Basic Pay} + text{D.A} right) times 15 text{ days} times text{No. of years of service} right] / 26 ]
Where, D.A = Dearness Allowance.
End of Service Benefits Eligibility:
1. Any person employed on wages/salary.
2. At the time of retirement, resignation, or on superannuation, an employee should have rendered continuous service of not less than five years.
3. Payable without completion of five years only in cases of death and disablement.
From India, Bengaluru
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[ text {Gratuity Calculation} = left[ left( text{Basic Pay} + text{D.A} right) times 15 text{ days} times text{No. of years of service} right] / 26 ]
Where, D.A = Dearness Allowance.
End of Service Benefits Eligibility:
1. Any person employed on wages/salary.
2. At the time of retirement, resignation, or on superannuation, an employee should have rendered continuous service of not less than five years.
3. Payable without completion of five years only in cases of death and disablement.
From India, Bengaluru
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SALARY SHEET CALCULATION.xls
Salary calculation.doc