Gratuity Calculation: Who is eligible for Gratuity, how total amount calculated, know complete details
What is Gratuity: According to the Gratuity Act 1972, if you work in a company for 5 consecutive years, then you become entitled to gratuity. The reward received by any employee from the company is gratuity.
Gratuity Calculator: If you are also employed then you must know about gratuity. But many salaried classes are not aware of when the person is entitled to gratuity and how it is calculated. According to the Gratuity Act 1972, if you work in a company for 5 consecutive years, then you become entitled to gratuity. The reward received by any employee from the company is gratuity. A part of the gratuity is deducted from the salary of the employee but the major part is given by the company.
Gratuity depends on salary and total time of job
The amount of gratuity you will get on completion of five years in the company, it depends on the current salary and the total time of the job. The amount of gratuity is paid only after the employee retires, resigns or is fired. The amount of gratuity is not paid during your employment. That is, if you have a job in a company for 9 years, then you will get gratuity only after resigning after 9 years. Not that you start claiming it on completion of 5 years.
Formula to Calculate Gratuity
There is a fixed formula to calculate gratuity, it is (last salary) x (number of years worked in the company) x (15/26). Last salary means your average salary of last 10 months. It includes basic pay and dearness allowance. Being four Sundays in a month, 26 days are counted and gratuity is calculated on the basis of 15 days.
Method of calculation
For example, you worked in a company for 15 years. Here your final salary is Rs 50000. In such a situation, after calculating (50000) x (15) x (15/26) according to the formula, the total amount came to Rs 432,692. You will get this amount as gratuity from the company on leaving the job. It depends on the intention of the company that you can also give more amount than the gratuity based on the fixed formula. According to the rules, gratuity cannot be given more than Rs 20 lakh.