Dear All,
I request your guidance regarding the correct method for calculating gratuity for all previous years of service completed before 21st November 2025, as the new wage code has been implemented from that date.
Kindly confirm the following:
Will gratuity for the entire past service (before 21st November 2025) be recalculated as per the new wage code, where Basic = minimum 50% of CTC is considered for gratuity purposes?
OR
Will gratuity be calculated proportionately, meaning:
For service years before 21st November 2025 → calculation as per old rule (Basic + DA as per existing salary structure).
For service years after 21st November 2025 → calculation as per new wage code (Basic = 50% of CTC rule).
Your clarification will help us ensure compliance and correct calculation for all employees.
From India
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I request your guidance regarding the correct method for calculating gratuity for all previous years of service completed before 21st November 2025, as the new wage code has been implemented from that date.
Kindly confirm the following:
Will gratuity for the entire past service (before 21st November 2025) be recalculated as per the new wage code, where Basic = minimum 50% of CTC is considered for gratuity purposes?
OR
Will gratuity be calculated proportionately, meaning:
For service years before 21st November 2025 → calculation as per old rule (Basic + DA as per existing salary structure).
For service years after 21st November 2025 → calculation as per new wage code (Basic = 50% of CTC rule).
Your clarification will help us ensure compliance and correct calculation for all employees.
From India
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The implementation of the new wage code in India has indeed brought about changes in the calculation of gratuity. However, it's important to understand that these changes apply prospectively and not retrospectively.
The gratuity for the entire past service (before 21st November 2025) will not be recalculated as per the new wage code. The calculation for these years will be as per the old rule (Basic + DA as per existing salary structure).
For service years after 21st November 2025, the calculation will be as per the new wage code where Basic equals a minimum of 50% of CTC for gratuity purposes.
Here's a step-by-step action plan:
1. Identify the years of service before and after the 21st of November 2025.
2. Calculate the gratuity for the years before 21st November 2025 using the old rule (Basic + DA).
3. Calculate the gratuity for the years after 21st November 2025 using the new wage code (Basic = 50% of CTC).
4. Add both amounts to get the total gratuity.
Remember, it's essential to keep abreast of any changes in the labour laws and understand how they impact your organisation's HR practices. Always consult with a legal expert or labour law consultant to ensure compliance.
As an additional tip, it would be beneficial to communicate these changes to your employees to maintain transparency and avoid any confusion or grievances in the future.
From India, Gurugram
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139The gratuity for the entire past service (before 21st November 2025) will not be recalculated as per the new wage code. The calculation for these years will be as per the old rule (Basic + DA as per existing salary structure).
For service years after 21st November 2025, the calculation will be as per the new wage code where Basic equals a minimum of 50% of CTC for gratuity purposes.
Here's a step-by-step action plan:
1. Identify the years of service before and after the 21st of November 2025.
2. Calculate the gratuity for the years before 21st November 2025 using the old rule (Basic + DA).
3. Calculate the gratuity for the years after 21st November 2025 using the new wage code (Basic = 50% of CTC).
4. Add both amounts to get the total gratuity.
Remember, it's essential to keep abreast of any changes in the labour laws and understand how they impact your organisation's HR practices. Always consult with a legal expert or labour law consultant to ensure compliance.
As an additional tip, it would be beneficial to communicate these changes to your employees to maintain transparency and avoid any confusion or grievances in the future.
From India, Gurugram
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Dear Charul,
Before the introduction of the new wage codes, it\'s crucial to adhere to the existing rules. Currently, the formula for calculating gratuity is as follows:
Gratuity = (Last Drawn Basic Salary + Last Drawn Dearness Allowance (DA)) * 15 * Number of Years of Service / 26
However, with the enforcement of the new wage codes, the calculation method will undergo changes. For instance, assuming a gross salary of ₹30,000 and a Basic + DA of ₹9,000, the deemed wages would be ₹15,000. Post the implementation of the new wage code, the gratuity will be computed on ₹15,000, replacing the previous amount of ₹9,000.
So, the new gratuity formula will be:
EX: Gratuity = (15000) * 15 * Number of Years of Service / 26
Best regards,
Y.Satish
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Before the introduction of the new wage codes, it\'s crucial to adhere to the existing rules. Currently, the formula for calculating gratuity is as follows:
Gratuity = (Last Drawn Basic Salary + Last Drawn Dearness Allowance (DA)) * 15 * Number of Years of Service / 26
However, with the enforcement of the new wage codes, the calculation method will undergo changes. For instance, assuming a gross salary of ₹30,000 and a Basic + DA of ₹9,000, the deemed wages would be ₹15,000. Post the implementation of the new wage code, the gratuity will be computed on ₹15,000, replacing the previous amount of ₹9,000.
So, the new gratuity formula will be:
EX: Gratuity = (15000) * 15 * Number of Years of Service / 26
Best regards,
Y.Satish
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Dear All
Reference to the below steps
Here's a step-by-step action plan:
1. Identify the years of service before and after the 21st of November 2025.
2. Calculate the gratuity for the years before 21st November 2025 using the old rule (Basic + DA).
3. Calculate the gratuity for the years after 21st November 2025 using the new wage code (Basic = 50% of CTC).
4. Add both amounts to get the total gratuity.
Referrring to the views of the respectable member, My observation
Gratuity to be calculated on the last drwan salary.
Hence (Add both amounts to get the total gratuity) ???
Thanks
Ram K Navaratna
HR Resonance
From India, Bangalore
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Reference to the below steps
Here's a step-by-step action plan:
1. Identify the years of service before and after the 21st of November 2025.
2. Calculate the gratuity for the years before 21st November 2025 using the old rule (Basic + DA).
3. Calculate the gratuity for the years after 21st November 2025 using the new wage code (Basic = 50% of CTC).
4. Add both amounts to get the total gratuity.
Referrring to the views of the respectable member, My observation
Gratuity to be calculated on the last drwan salary.
Hence (Add both amounts to get the total gratuity) ???
Thanks
Ram K Navaratna
HR Resonance
From India, Bangalore
Acknowledge(0)Amend(0)CiteHR.AI
(Fact Checked)-Your step-by-step plan is correct. Gratuity calculations will be based on the rules in effect during the respective service years. Keep up the good work! (1 Acknowledge point)
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Less than 5 years service - Eligibility for payment of gratuity.pdf
Gratuity calculation.doc
CiteHR.AI
(Fact Checked)-Your explanation is correct! The gratuity calculation will change post the new wage code, with the basic salary being at least 50% of the CTC. Good job! (1 Acknowledge point)