Hi,
Please inform me regarding the procedure of Gratuity calculation. How will you calculate gratuity based on working days? What is the minimum eligibility for an employee's working days in a year? Please help us in this regard as soon as possible.
From India, Kolkata
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Please inform me regarding the procedure of Gratuity calculation. How will you calculate gratuity based on working days? What is the minimum eligibility for an employee's working days in a year? Please help us in this regard as soon as possible.
From India, Kolkata
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$$$Formula for calculating Gratuity:
Gratuity is payable @ 15 days wages for every completed year. If in last year, the service is more than 6 months, it will be counted as full year for purpose of gratuity. It is applicable only after of 5th year onward. The general formula = 15/26*No. of service year*Last Wages drawn In case of seasonal establishment, Gratuity is Payable @ 7 days wages for each season.
$$$ Maximum Gratuity Ceiling:
The maximum limit raised (w.e.f-24th May 2010) from “3.5 laces to 10 lac”.
$$$ Compulsory Insurance for Gratuity Liability:
Every Employer has to obtain an insurance in the manner prescribed, for his Liability for payment towards the Gratuity under this Act, from the Life Insurance Corporation of India established under the LIC of India Act or any other prescribed Insurer.
$$$ Nomination under the Act:
Each Employee who has completed one year of service is required to make a nomination for the purposes of gratuity in case of his death. There can be more than one nominee in – “Form F”. Nominees may be changed at any time by the employee, by giving a written notice to the employer.
$$$ Forfeiture of Gratuity:
Gratuity can be forfeited where an employee has been terminated:
(a) for any act, willful omission or negligence causing any damage or loss to or destruction of any property belonging to the employer,
(b) for riotous or disorderly conduct or any act of violence on his part,
(c) for any act which constitutes an offence involving moral turpitude, provided the offence has been committed by him in the course of his employment. However, the employer must terminate the services of the employee because of this damage.
The forfeiture can be done on three category misconduct @ (i) NIL, (ii) to the extent of loss or damage and (iii) the whole amount of gratuity.
From India, Surat
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152Gratuity is payable @ 15 days wages for every completed year. If in last year, the service is more than 6 months, it will be counted as full year for purpose of gratuity. It is applicable only after of 5th year onward. The general formula = 15/26*No. of service year*Last Wages drawn In case of seasonal establishment, Gratuity is Payable @ 7 days wages for each season.
$$$ Maximum Gratuity Ceiling:
The maximum limit raised (w.e.f-24th May 2010) from “3.5 laces to 10 lac”.
$$$ Compulsory Insurance for Gratuity Liability:
Every Employer has to obtain an insurance in the manner prescribed, for his Liability for payment towards the Gratuity under this Act, from the Life Insurance Corporation of India established under the LIC of India Act or any other prescribed Insurer.
$$$ Nomination under the Act:
Each Employee who has completed one year of service is required to make a nomination for the purposes of gratuity in case of his death. There can be more than one nominee in – “Form F”. Nominees may be changed at any time by the employee, by giving a written notice to the employer.
$$$ Forfeiture of Gratuity:
Gratuity can be forfeited where an employee has been terminated:
(a) for any act, willful omission or negligence causing any damage or loss to or destruction of any property belonging to the employer,
(b) for riotous or disorderly conduct or any act of violence on his part,
(c) for any act which constitutes an offence involving moral turpitude, provided the offence has been committed by him in the course of his employment. However, the employer must terminate the services of the employee because of this damage.
The forfeiture can be done on three category misconduct @ (i) NIL, (ii) to the extent of loss or damage and (iii) the whole amount of gratuity.
From India, Surat
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The Period of Service For the Gratuity Payment:
Your gratuity increases with the increase of the service period. But to get the gratuity, you must complete 5 years in service (more than 4 years 6 months).
For the gratuity calculation, the years of service are rounded off to the nearest integer. It means if you have completed 7 years 7 months in service, the length of service for gratuity calculation would be 8 years. Similarly, if you have completed 9 years and 5 months, the period for gratuity calculation would be 9 years.
According to the law for gratuity calculation, your salary will include only the following components:
Basic Salary
Dearness Allowance (if any)
It means HRA, bonus, special allowance, and reimbursements are not taken for the gratuity calculation. Now you know why private sector employers try to keep basic salary low.
Formula Of Gratuity Calculation:
According to the gratuity rules, you must get the salary of 15 days for every completed year as gratuity. It means if you have completed 5 years in service, you must get the gratuity of one day's salary * 15 * 5. It seems very simple.
But what do you think what is the salary of a day. Will it be a monthly salary divided by 31 or a monthly salary divided by 30? No. It would be a monthly salary divided by 26. Why? It is because, according to labor law, every employee is entitled to weekly offs. Therefore, the average working days in a month are not more than 26 days. You get the monthly salary for the work of 26 days. Hence, your one day's salary would be a monthly salary divided by 26.
Gratuity = Number of years * Last drawn salary of 15 days
= Number of years * 15/26 * monthly salary
Example of Gratuity Calculation
A Person works in a food processing company as a marketing manager. He gets a basic salary of Rs 26,000, dearness allowance of Rs 8,000, special allowance of Rs 21,000, and reimbursements of Rs 45,000. After 6 years 8 months of service, he resigns from the job. What would be his gratuity?
The last drawn salary of Person
= Basic salary + DA
= Rs 26,000 + Rs 8,000
= Rs 34,000
Years of Service
= 6 years 8 months
= 7 years
Gratuity
= Salary * years * 15/26
= Rs 34,000 * 7 * 15/26
= Rs 1,37,308
It is sufficient to understand all about Gratuity.
From India, Surat
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Your gratuity increases with the increase of the service period. But to get the gratuity, you must complete 5 years in service (more than 4 years 6 months).
For the gratuity calculation, the years of service are rounded off to the nearest integer. It means if you have completed 7 years 7 months in service, the length of service for gratuity calculation would be 8 years. Similarly, if you have completed 9 years and 5 months, the period for gratuity calculation would be 9 years.
According to the law for gratuity calculation, your salary will include only the following components:
Basic Salary
Dearness Allowance (if any)
It means HRA, bonus, special allowance, and reimbursements are not taken for the gratuity calculation. Now you know why private sector employers try to keep basic salary low.
Formula Of Gratuity Calculation:
According to the gratuity rules, you must get the salary of 15 days for every completed year as gratuity. It means if you have completed 5 years in service, you must get the gratuity of one day's salary * 15 * 5. It seems very simple.
But what do you think what is the salary of a day. Will it be a monthly salary divided by 31 or a monthly salary divided by 30? No. It would be a monthly salary divided by 26. Why? It is because, according to labor law, every employee is entitled to weekly offs. Therefore, the average working days in a month are not more than 26 days. You get the monthly salary for the work of 26 days. Hence, your one day's salary would be a monthly salary divided by 26.
Gratuity = Number of years * Last drawn salary of 15 days
= Number of years * 15/26 * monthly salary
Example of Gratuity Calculation
A Person works in a food processing company as a marketing manager. He gets a basic salary of Rs 26,000, dearness allowance of Rs 8,000, special allowance of Rs 21,000, and reimbursements of Rs 45,000. After 6 years 8 months of service, he resigns from the job. What would be his gratuity?
The last drawn salary of Person
= Basic salary + DA
= Rs 26,000 + Rs 8,000
= Rs 34,000
Years of Service
= 6 years 8 months
= 7 years
Gratuity
= Salary * years * 15/26
= Rs 34,000 * 7 * 15/26
= Rs 1,37,308
It is sufficient to understand all about Gratuity.
From India, Surat
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Your query is without the required details. Please do not pose hypothetical questions. Do you work 5 days a week or 6 days a week? In the case of the former, you are required to work for 190 days in a year, and in the case of the latter, for 240 days. Based on the above calculation, you should have worked for 5 years to be eligible to receive gratuity.
From India, Mumbai
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From India, Mumbai
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FORM-F-NOMINATI ON OF GRATUITY.pdf
Gratuity Form I.doc