Gratuity Calculation:Â According to the rules, after an employee renders continuous service in the company for 5 years, he becomes entitled to receive gratuity. The amount of gratuity is paid after the employees retire or resign.
Gratuity is a reward given by the company to the employee, which is given to him for providing excellent services continuously for a long period of time. According to the rules, after an employee renders continuous service in the company for 5 years, he becomes entitled to receive gratuity. The amount of gratuity is paid after the employees retire or resign. But the question is, on what basis is the amount of gratuity to be received for how many years of service determined?
Formula to calculate gratuity
There is a certain formula to calculate gratuity, on the basis of which it is decided how much amount will be given to the employee. The formula is – (final salary) x (number of years worked in the company) x (15/26). Last salary means the average of your last 10 months’ salary. Basic salary, dearness allowance and commission are included in this salary. Due to 4 Sundays being week off in a month, 26 days are counted and gratuity is calculated on the basis of 15 days.
70 thousand salary, 10 years job…how much amount will I get?
Suppose your last salary is Rs 70,000 and you have served a company continuously for 10 years. In such a situation, after calculating (70000) x (10) x (15/26) according to the formula, the total amount will come out to Rs 4,03,846. You will get this amount as gratuity from the company. Whereas if you have worked for only 5 years and the last salary is Rs 70,000, then you will get Rs 2,01,923 as gratuity. According to the rules, gratuity cannot be given more than Rs 20 lakh.
The 5 year rule is not valid in this situation
According to the Gratuity Act 1972, if an employee dies due to an accident or becomes disabled and is unable to work again, then the rule of working for 5 years for payment of gratuity does not apply to him. In such a situation, the gratuity amount is paid to the nominee or dependent. While joining the job, you can register the name of your nominee for your gratuity amount by filling Form F.
