Hi,
Can someone clarify the below questions related to gratuity payout?
1) Some organizations do the gratuity payout as follows: Can someone help me to understand if this is from the Payment Act or the organization's goodwill. If the employee has joined the organization prior to FY 2004, the gratuity is calculated as Last Monthly Basic * No. of years of exp. If an employee joined on/after 2004, it is computed as Last Monthly Basic * No. of years of exp * 15/26.
2) For an employee who joined in 2003, what is the gratuity calculation to be used?
3) Is the number of years calculated should be used as i) the number of years between the date of joining and the date of submission of resignation, or ii) the number of years between the date of joining and the last day of service (inclusive of the notice period)?
Thanks in advance!!
From India, Trivandrum
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1Can someone clarify the below questions related to gratuity payout?
1) Some organizations do the gratuity payout as follows: Can someone help me to understand if this is from the Payment Act or the organization's goodwill. If the employee has joined the organization prior to FY 2004, the gratuity is calculated as Last Monthly Basic * No. of years of exp. If an employee joined on/after 2004, it is computed as Last Monthly Basic * No. of years of exp * 15/26.
2) For an employee who joined in 2003, what is the gratuity calculation to be used?
3) Is the number of years calculated should be used as i) the number of years between the date of joining and the date of submission of resignation, or ii) the number of years between the date of joining and the last day of service (inclusive of the notice period)?
Thanks in advance!!
From India, Trivandrum
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In deciding the eligibility and calculation of gratuity payable as per the Payment of Gratuity Act, the year of joining, whether 2004 or 2005, as the case may be, is immaterial. It is purely based on the completion of five years in the organization, calculated from the date of joining until the last day of work. The amount of gratuity is calculated on the last drawn salary, equating to 15 days' salary for every completed year of service or fraction of a year over six months.
Although the eligibility factor has been disputed in some court verdicts, which allowed gratuity for individuals who have not completed five years of service but have completed four years and 240 days in the fifth year, none of these verdicts has stated that it is based on joining prior to a specific year. Therefore, it should be understood that gratuity is to be calculated based on the employee's date of joining.
Regards,
Madhu.T.K
From India, Kannur
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Although the eligibility factor has been disputed in some court verdicts, which allowed gratuity for individuals who have not completed five years of service but have completed four years and 240 days in the fifth year, none of these verdicts has stated that it is based on joining prior to a specific year. Therefore, it should be understood that gratuity is to be calculated based on the employee's date of joining.
Regards,
Madhu.T.K
From India, Kannur
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Dear Khatib,
Any person who has completed five years of service in the same organization, that's 4 years + 240 days, will be eligible for gratuity as per the Payment of Gratuity Act, 1972.
- Gratuity is applicable in every factory, oil field, plantation, port, mine, railway, shop, and establishment employing 10 or more employees.
- As per Section 2 (S), 15 days' wages for every completed year as if the month comprises 26 days at the last drawn wages. Therefore, the calculation that you have provided is correct.
- Calculation of price-rated employee (Section 4) - 15 days' wages for every completed year on an average of 3 months' wages.
As per your second query, as Mr. Madhu T.K. answered, it should be calculated based on the joining of the employee.
From India, Visakhapatnam
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Any person who has completed five years of service in the same organization, that's 4 years + 240 days, will be eligible for gratuity as per the Payment of Gratuity Act, 1972.
- Gratuity is applicable in every factory, oil field, plantation, port, mine, railway, shop, and establishment employing 10 or more employees.
- As per Section 2 (S), 15 days' wages for every completed year as if the month comprises 26 days at the last drawn wages. Therefore, the calculation that you have provided is correct.
- Calculation of price-rated employee (Section 4) - 15 days' wages for every completed year on an average of 3 months' wages.
As per your second query, as Mr. Madhu T.K. answered, it should be calculated based on the joining of the employee.
From India, Visakhapatnam
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Dear Kathib,
In your formula, please make it "number of years of service" instead of "number of years of experience." Though it is a common fact that each year in service makes a person experienced in service, the Act uses the term 'service' and not 'experience.'
Thanks and regards,
From India, Pune
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In your formula, please make it "number of years of service" instead of "number of years of experience." Though it is a common fact that each year in service makes a person experienced in service, the Act uses the term 'service' and not 'experience.'
Thanks and regards,
From India, Pune
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Whether the employee joined before or after 2003, gratuity should be calculated as follows: last drawn Basic + DA divided by 26, multiplied by 15, then multiplied by the number of completed years of continuous service subject to a maximum of Rs ten lakhs. Years of service to be reckoned back from the date of relieving to the date of joining.
Varghese Mathew
BIL, PGDPM
09961266966
From India, Thiruvananthapuram
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Varghese Mathew
BIL, PGDPM
09961266966
From India, Thiruvananthapuram
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Hello Madam,
I resigned after the completion of 4 years and 243 working days (excluding Weekly Off & Leave) [4 Year 10 Months & 3 Days with all leave & Weekly Off]. In my Full & Final, the company denied to pay gratuity.
How to proceed now and approach through the legal route? Whom to contact and how?
Regards,
Anand Parikh
From India, Vadodara
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I resigned after the completion of 4 years and 243 working days (excluding Weekly Off & Leave) [4 Year 10 Months & 3 Days with all leave & Weekly Off]. In my Full & Final, the company denied to pay gratuity.
How to proceed now and approach through the legal route? Whom to contact and how?
Regards,
Anand Parikh
From India, Vadodara
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