Gratuity Rules Update : If an employee works for 4 years 7 months or less, he does not get gratuity, and his service time is considered as 4 years only.
Gratuity Rules Update : The Modi government recently announced the formation of the 8th Pay Commission, which will come into effect from 2026. The purpose of this commission is to revise the salary and pension of government employees and pensioners. Along with this, the new Unified Pension Scheme (UPS) is also going to be implemented from April 1, 2025. All this will also affect the gratuity.
Actually, gratuity is an amount which is provided by the company to an employee for his services after working for a long time. It is a type of reward which is given to the employee when he works continuously for a long time in a company. According to Indian labor law, an employee has to work in a company for at least 5 years to become eligible for gratuity.
Worked in the company for 4 years and 11 months
If an employee works for 4 years and 11 months in a company, he will not be entitled to gratuity, even if he is less than a month away from completing 5 years. However, according to the rule, if the employee has worked for 4 years and 8 months, he will be given gratuity considering it as a full 5 years. But if an employee works for 4 years 7 months or less, he does not get gratuity, and his service time is considered as 4 years only.
How is gratuity decided
The amount of gratuity in the company is usually decided on the basis of the basic salary and years of service of the employee. It is given at the time of retirement or resignation of the employee, provided he has completed a minimum service of 5 years. Apart from this, if an employee is suddenly fired from the job, he is also entitled to gratuity. Talking about the formula for calculating gratuity, it will be- Gratuity = (Last salary × 15/26) × Number of years of completed service.
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