Gratuity Calculator: Last year, the gratuity limit for central government employees was increased from Rs 20 lakh to Rs 25 lakh. This increase was done after a 50% increase in the Dearness Allowance (DA) of the employees in which Dearness Allowance (DA) reached 50% of their basic salary.
Gratuity Calculator: If you are in a government job, then this news is very special for you. Now central employees can get gratuity amount up to Rs 25 lakh. But what will be the conditions for this? How is gratuity calculated? And which employees will benefit the most from it? We are going to give you complete details in this news, so that you can know how much gratuity you will get and what is necessary to get it. So let’s know.
What is Gratuity?
First of all, let us tell you what Gratuity is. Actually, gratuity is a lump sum amount given to an employee on leaving the job or retiring. It can be said that this is a reward given by the company to the employee, which is given to him for long service. This amount is determined by the final salary of the employee and the number of years he has worked.
The gratuity limit for central government employees has been increased from the existing Rs 20 lakh to Rs 25 lakh from January 1, 2024. Due to increase in dearness allowance (DA) of central employees by 50%, gratuity has also increased.
Let us tell you that the new gratuity limit was announced on May 30, 2024 in a circular issued by the Department of Pension & Pensioners Welfare under the Ministry of Personnel, Public Grievances and Pensions.
Gratuity Act
The Gratuity Act applies to various sectors including factories, mines, oil fields, plantations, ports, railways, motor transport undertakings, companies and shops with at least 10 employees. The Act entitles employees to receive gratuity payment equivalent to 15 days’ wages for every year till the completion of the job. For non-government workers, the limit is Rs 10 lakh. On the other hand, seasonal establishments calculate gratuity on the basis of seven days’ wages in each season. Seasonal establishments, also known as mausami pratisthan, are businesses or industries that operate only during a particular period every year.
Last year, the gratuity limit for central government employees was increased from Rs 20 lakh to Rs 25 lakh. This increase was made after a 50% increase in the Dearness Allowance (DA) of employees, in which Dearness Allowance (DA) reached 50% of their basic salary.
The Gratuity Act guarantees employees better gratuity terms in all agreements or contracts. For companies that come under the jurisdiction of the Central Government or operate in multiple states, the Center acts as the governing body.
Who will get the benefit of gratuity (Gratuity Eligibility)
Under the Gratuity Act, companies have to pay gratuity to retired employees or employees who leave the job after at least five years of service. The employee is entitled to get gratuity in these cases:
- On resigning after completing five years of continuous service
- On taking retirement based on the company’s policy
Under certain circumstances, the employee can get gratuity even after working for less than 5 years.
- In case of death of the employee, gratuity is given to the nominee or legal heir.
- If a person becomes disabled due to an accident or illness, even if he has not completed 5 years of service.
- If the employees working in underground mines work continuously for 4 years and 190 days.
- If the employees working in other organizations work continuously for 4 years and 8 months i.e. 4 years and 240 days.
Gratuity calculation formula
A simple formula is used to calculate gratuity. You can know your gratuity amount by using the formula given below:
(Last salary) x (Years of job) x (15/26)
Salary components: Salary component includes basic salary, dearness allowance (DA) and commission.
Monthly work days: 26 working days are considered in a month.
Method of calculation: The average of 15 days is determined on the basis of half month’s salary.
How to claim gratuity?
For gratuity claim, a qualified employee has to submit an application in Form I to his company. If for any reason the employee is unable to do so, then his nominee or legal heir is allowed to do so on his behalf.
On receiving the application, the company first verifies the claim, and then it has to immediately calculate the gratuity amount to be paid to the employee. This is necessary to ensure timely payment of gratuity and avoid any delay.
According to the Gratuity Payment Act, 1972, the employer is obliged to pay the gratuity amount within 30 days from the due date. In case of not being able to do so for any reason, the employer may have to pay interest on the outstanding amount from the due date to the actual payment date.
Resolution of Disputes:
If there is any disagreement regarding the gratuity amount or eligibility of an employee, then according to the Act, the matter can be placed before the governing body. For this, the employee has to file an application in Form N to the governing body of that specific region.
