Gratuity Rule: You should know that gratuity is available even for less than 5 years of job. There are some special rules for this. Many people are confused about whether the notice period is counted in gratuity calculation or not?
Gratuity Rule: Employees working in the private sector are always confused about gratuity. The most discussed among them is how gratuity is calculated. After how many years of service one gets gratuity.
Although everyone knows that gratuity is available after working continuously for 5 years in an institution. But if you also do a private job, then you should know that gratuity is available even for less than 5 years of job. There are some special rules for this. If you have any questions related to gratuity in your mind, then you will get its answers below.
Question- What is gratuity? (What is Gratuity?)
Answer- Gratuity is given by the company to its employees. In a way, it is a way of expressing gratitude from the company to the employee in return for continuous service. It is a big financial support for the employees.
Question- Are all private employees entitled to gratuity?
Answer- The Payment and Gratuity Act applies to all factories, mines, oil fields, ports and railways in the country. Along with this, employees of shops and companies that employ more than 10 people also get the benefit of gratuity.
Question- After how many years of work does one get gratuity?
Answer- By the way, employees working continuously for 5 years in any institution become eligible for gratuity. But in some cases, the benefit of gratuity is available even for less than 5 years of service. ‘Continuous work’ is clearly defined in section 2A of the Gratuity Act. According to this, many employees can get the benefit of gratuity even if they do not work for the full 5 years.
Question- Do you get the benefit of gratuity before 5 years?
Answer- According to section 2A of the Gratuity Act, if employees working in underground mines complete 4 years and 190 days continuously with their employer, then they get the benefit of gratuity. On the other hand, employees working in other organizations become eligible for gratuity after working for 4 years 240 days (ie 4 years 8 months).
Question- Does notice period also count in gratuity?
Answer- Yes, many people are confused about whether notice period is counted in gratuity calculation or not? The rule clearly states that the notice period is counted as ‘continuous service’, hence the notice period is added to the gratuity.
Question- How is the amount calculated in gratuity?
Answer- It is a very easy way, you can calculate your gratuity yourself.
Total gratuity amount = (last salary) x (15/26) x (number of years worked in the company).
Understand with an example: Suppose you have worked in the same company for 7 years continuously. If the last salary is Rs 35000 (including basic salary and dearness allowance), then the calculation will be something like this-
(35000) x (15/26) x (7)= Rs 1,41,346. An employee can get a maximum gratuity of up to Rs 20 lakh.
It is worth noting that as per the rules till now, to get gratuity, it is necessary for the employee to work continuously for 5 years in a single company. However, the central government is considering reducing it to 3 years. If this happens, employees working in the private sector will benefit on a large scale.
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