Dear Seniors, If an employee is taking 160000 rupees per month, what would be his gratuity amount after 5 years as per Delhi State? Also, if we keep his basic salary at 25000 as per the Minimum Wages Act Delhi, the calculation will be done on 25000 or 50% of 160000. Please suggest the right way.
Thanks
From India, New Delhi
Thanks
From India, New Delhi
Hi, Gratuity can be calculated on the last drawn Basic (+ DA if applicable). Last drawn Basic x 15/26 x number of years completed.
From India, Madras
948From India, Madras
Gratutiy is on basic and da
You are keeping DA at 15% of his gross.
This is why govt is putting minimum basic in the new wage code and other labour laws.
But at the moment, nothing wrong with your working, though I think it will make your company less attractive to prospective employees
From India, Mumbai
You are keeping DA at 15% of his gross.
This is why govt is putting minimum basic in the new wage code and other labour laws.
But at the moment, nothing wrong with your working, though I think it will make your company less attractive to prospective employees
From India, Mumbai
If the Basic + DA = 25,000/- After completion of 5 years service - 25,000x15x5/26 = 72,115/-
From India
From India
Under Payment of Gratuity Act there is no mention about Basic Salary. The wages/ salary as per the Act shall include all emoluments that is payable to an employee as per contract of employment. The only exclusions are:
Overtime allowance
Bonus
House Rent Allowance
Commission and
other allowance.
A perusal of the above will make it clear that allowances which are not fixed and quantified in the appointment order/ contract of employment are the components which can be excluded from computation of gratuity. Of these HRA is the amount which will often be confused and legally HRA is payable only to those who reside in leased accommodation. It is payable only on another condition that the spouse is not in receipt of the same. If this component is available to all the employees, it will be termed as an allowance universally paid to all employees, and then it will be part of salary for the purpose of computation of gratuity.
For more details, please follow the link bellow
https://madhu-t-k.blogspot.com/2024/04/gratuity-qualifying-salary-some.html
The above observations are made by me based on my own experience. You can have a different opinion. In an establishment where an old system of payroll management exists, the wages should mean only Basic wage and Dearness allowance. But in CTC era, it should require a change. I don't think that if a person takes one day LOP (leave without Pay) his HRA will be paid in full, and that establishes that HRA is part of remuneration only. In order to be called an allowance excluded from the scope of wages it should be a 'compensatory' allowance, an allowance to compensate a cost.
From India, Kannur
Overtime allowance
Bonus
House Rent Allowance
Commission and
other allowance.
A perusal of the above will make it clear that allowances which are not fixed and quantified in the appointment order/ contract of employment are the components which can be excluded from computation of gratuity. Of these HRA is the amount which will often be confused and legally HRA is payable only to those who reside in leased accommodation. It is payable only on another condition that the spouse is not in receipt of the same. If this component is available to all the employees, it will be termed as an allowance universally paid to all employees, and then it will be part of salary for the purpose of computation of gratuity.
For more details, please follow the link bellow
https://madhu-t-k.blogspot.com/2024/04/gratuity-qualifying-salary-some.html
The above observations are made by me based on my own experience. You can have a different opinion. In an establishment where an old system of payroll management exists, the wages should mean only Basic wage and Dearness allowance. But in CTC era, it should require a change. I don't think that if a person takes one day LOP (leave without Pay) his HRA will be paid in full, and that establishes that HRA is part of remuneration only. In order to be called an allowance excluded from the scope of wages it should be a 'compensatory' allowance, an allowance to compensate a cost.
From India, Kannur
Out of Rs.1,60,000/- per month, as per the new Code on Wages, you cannot keep the basic salary as Rs.25,000/-. The new definition reads as follows in the Code on Wages:
Sec. 2 (y): “Wages”:
Wages means all remuneration capable of being expressed in terms of money payable to a person employed and includes (First Part):
(i) Basic Pay
(ii) Dearness Allowance and
(iii) Retaining Allowance, if any.
There are exclusions to the term wages such as bonus, HRA, value of house accommodation, light, water, medical attendance, bonus, incentive, employer contribution to PF and Pension Fund, amount payable through an award or settlement passed by any Court, any commission payable etc. (Second Part).
Clause 2 (y): “Wages”:
"Wages means all remuneration capable of being expressed in terms of money payable to a person employed and includes (First Part):
(i) Basic Pay
(ii) Dearness Allowance and
(iii) Retaining Allowance, if any.
There are exclusions to the term wages such as bonus, HRA, value of house accommodation, light, water, medical attendance, bonus, incentive, employer contribution to PF and Pension Fund, amount payable through an award or settlement passed by any Court, any commission payable etc (Second Part).
If the excluded amount (Clauses “a” to “I”) exceeds 50% of the total remuneration payable (second part), then the amount which exceeds one half (or any other percentage as fixed by the Appropriate Govt) of the said total remuneration shall be deemed as Wages (first part) under the new Code."
Hence, it is very difficult for the organizations to keep the basic wages very low in the coming years as it is being done at present. More than that, my personal opinion is organizations should not much worry about paying gratuity because if someone is working for 5 years is a good thing in the present scenario and they should be definitely rewarded for their long service.
From India, Chennai
Sec. 2 (y): “Wages”:
Wages means all remuneration capable of being expressed in terms of money payable to a person employed and includes (First Part):
(i) Basic Pay
(ii) Dearness Allowance and
(iii) Retaining Allowance, if any.
There are exclusions to the term wages such as bonus, HRA, value of house accommodation, light, water, medical attendance, bonus, incentive, employer contribution to PF and Pension Fund, amount payable through an award or settlement passed by any Court, any commission payable etc. (Second Part).
Clause 2 (y): “Wages”:
"Wages means all remuneration capable of being expressed in terms of money payable to a person employed and includes (First Part):
(i) Basic Pay
(ii) Dearness Allowance and
(iii) Retaining Allowance, if any.
There are exclusions to the term wages such as bonus, HRA, value of house accommodation, light, water, medical attendance, bonus, incentive, employer contribution to PF and Pension Fund, amount payable through an award or settlement passed by any Court, any commission payable etc (Second Part).
If the excluded amount (Clauses “a” to “I”) exceeds 50% of the total remuneration payable (second part), then the amount which exceeds one half (or any other percentage as fixed by the Appropriate Govt) of the said total remuneration shall be deemed as Wages (first part) under the new Code."
Hence, it is very difficult for the organizations to keep the basic wages very low in the coming years as it is being done at present. More than that, my personal opinion is organizations should not much worry about paying gratuity because if someone is working for 5 years is a good thing in the present scenario and they should be definitely rewarded for their long service.
From India, Chennai
The basic wages under the new code is just a joke. If the employee works overtime or earns commission in the last month, his gratuity would also go up! Already we have a definitions to wage which were more or less the same under all the Acts, and now the Code which has aimed to simplify the laws has made it more complicated. It has not directly said that of the total remuneration 50% will be basic wage but has a lot of allowances and finally a calculation also. Even the employer contribution to PF is an allowance under the new system, in an undertaking where the PF is contributed without celling of Rs 15000, the contributions to PF it is very difficult to decide what is the amount of contribution to be made very month.
From India, Kannur
From India, Kannur
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