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Gratuity Calculation Formula in India 2013 | Gratuity calculator

 Introduction

Gratuity is the payment made by the employer to his ex- employee for his past services. Gratuity is similar to a  gift given by employer for appreciation of past services of his employee . The technical definition of gratuity given by ICAI is “gratuity is a  voluntary payment made by an employer  in appreciation of services rendered by employee .

Who is eligible for Gratuity ?

As per Payment of Gratuity Act  1972, any employee who has been in continuous service for 5 years is eligible for gratuity .

During the above mentioned 5 years , employee is eligible for casual leave and sick leave without affecting his eligibility.

In case of death of an employee , the above condition 5 Years of continuous service is not applicable i.e. even if an employee dies

after 2 years of service , he/she is still eligible for gratuity .

 


 

 How is gratuity calculated?

 

a) Gratuity calculation formula for employees receiving monthly salary

 

(15/26) * Last Salary Drawn * Completed years of service

Gratuity calculation formula

When calculating completed years of service , if an employee worked for more than 6 months , it will be considered as full year .

Example : Employee worked for 14 years and 7 month , then completed years of service = 15 years

Example: Employee worked for 14 years and 5 months ,then completed years of service = 14 years

Example: Employee worked for 14 years and 6 months, then completed years of service = 14 years

Last salary drawn = basic salary + dearness allowance

 

b) Gratuity calculation formula for piece rated employees

( workers receiving payment on the basis of the number of pieces produced )

Gratuity shall be calculated as follows:

 

Last drawn wages *15/26 *completed years of service

 

  • Completed years of service are calculated in the same way as for employees receiving monthly salary.
  • Last drawn wages are computed by taking average of the total wages received by him for a period of three months immediately preceding the termination of his employment. While computing daily wages, the total wages of last three months is to be divided by number of days the employee actually worked, and not by the number of days or the number of working days in the said period of three months .

Example : A piece rated employee received Rs. 30,000 during the last three months before his retirement. The factory had 60 working days in the last three months but the employee came to work for only 30 days.

Last salary drawn will be calculated as rupees 30,000÷30= Rs. 1000

 

 


 

Maximum Amount of Gratuity

The amount of gratuity cannot exceed Rs 10,00,000 (10 lacs) . Even if it exceeds , maximum amount payable by employer shall be Rs 10,00,000

 


 

When is Gratuity Payable ?

Gratuity is Payable on employee’s Supernnuation , Retirement Or death (whichever is earlier).


 

Nomination

In case of death of an employee , gratuity is paid to their legal heirs (nominees)

Every employee who has completed one year of service is required to make a nomination. This nomination should be made within 30 days of completion of first year of service.

This nomination should be made in the favour of a family member. A nomination made in the name of any other person is void. However, if the employer does not have any family when he can make a nomination in favour of any person. But the employee will be required to make a fresh nomination within 90 days of acquiring a family.

Nomination form


 

Payment of Gratuity

After Gratuity becomes Payable , employer is required to pay it within 30 Days as per the provisions of Payment of Gratuity Act  1972 .If the employer fails to pay gratuity within 30 days then, he shall be liable to pay simple interest at the rate notified by central government

 

Recommended :  Learn How is gratuity Taxed  Income tax payable by employee on gratuity !

By Paramjit Singh

 

296 Responses to Gratuity Calculation Formula in India 2013 | Gratuity calculator

  1. Dear all,

    I joined KPO on dated 3-8-2009, if i complete 3-8-2014, then i will complete 5 years and 1 days in that organisation. Now my question is on my service i have taken 104 leaves (LOP) and specifically Number of days worked=1319, week-off-249, comp-off=41, EL=57, CL=56 and LOP=100. In other words salary paid on days=1724, unpaid salary on days 104. Kindly explain i am eligible for grauity as per act 1972 or not?

    (Note: Kindly send me the details to mpratish22@gmail.com)

    Regards
    Pratish.M

  2. Months Number of days worked Week off Comp off EL CL Informed/ un-informed Paid Unpaid
    Aug-09 24 3 1 1 28 1
    Sep-09 26 4 30
    Oct-09 26 4 1 31
    Nov-09 20 4 5 1 29 1
    Dec-09 25 5 1 31
    Jan-10 26 4 1 31
    Feb-10 21 5 2 28
    Mar-10 26 4 1 31
    Apr-10 25 4 1 30
    May-10 18 5 8 23 8
    Jun-10 5 1 2 22 8 22
    267 Jul-10 25 5 1 31 331
    Aug-10 27 4 31
    Sep-10 21 4 1 3 1 30
    Oct-10 15 3 1 4 8 31
    Nov-10 25 4 1 30
    Dec-10 12 1 18 13 18
    Jan-11 25 5 1 31
    Feb-11 25 2 1 28
    Mar-11 24 6 1 31
    Apr-11 25 4 1 30
    May-11 23 4 2 2 29 2
    Jun-11 13 2 5 10 30
    253 Jul-11 18 6 4 2 29 2 343
    Aug-11 24 5 1 1 31
    Sep-11 12 4 1 1 12 18 12
    Oct-11 10 3 18 13 18
    Nov-11 27 3 30
    Dec-11 26 5 31
    Jan-12 24 5 2 31
    Feb-12 22 4 1 2 29
    Mar-12 19 4 1 3 27 4
    Apr-12 24 5 1 30
    May-12 24 4 1 2 31
    Jun-12 16 2 1 8 3 30
    251 Jul-12 23 4 4 31 332
    Aug-12 22 4 3 1 1 30 1
    Sep-12 17 6 7 23 7
    Oct-12 23 6 1 1 30 1
    Nov-12 23 5 1 1 29 1
    Dec-12 27 4 31
    Jan-13 26 4 1 31
    Feb-13 14 5 1 7 1 28
    Mar-13 22 4 4 1 31
    Apr-13 25 2 2 1 30
    May-13 23 4 3 1 31
    Jun-13 23 6 1 30
    269 Jul-13 24 6 1 31 355
    Aug-13 23 6 1 1 31
    Sep-13 23 4 2 1 30
    Oct-13 21 7 1 1 1 31
    Nov-13 26 2 1 1 30
    Dec-13 26 4 1 31
    Jan-14 23 4 1 2 1 31
    Feb-14 23 3 2 28
    Mar-14 21 5 1 3 1 31
    Apr-14 23 5 1 1 30
    May-14 24 3 1 1 2 31
    Jun-14 16 7 4 3 27 3
    266 Jul-14 17 2 2 19 2 350
    Aug-14 3 3

    Note: I will complete 5 Year of service on 3rd of Augest 2014
    Kindly let me know whether i am eligible for grauity or not?

  3. Monthly salary taken for calculation of Gratuity is Basic or Gross one month salary? e.g somebody takes monthly salary as 1.5 lacs of which Rs 80k is basic, which component will be taken for calculation…Rs 1.5 lacs or Rs 80k?

  4. Dear Sir,
    I was worked with Shell Petrol Pump 9 years .Shell giving franchise to operate petrol pumps like that i was worked with 4 different enterprises during this 9 years .But 5 years not completed in each enterprises.Total together 9 years i worked if there is any chance to get gratuity and kindly let me know.

    Thanks and Regards,

    Unnikrishnan.B.A

  5. Q -> Suppose i have completed 6.5 years and after few days I have died .
    question is , how much gratuity I will get.
    Is it for 5 years or 10 years or only for 6.5 years

  6. Sir/Madam,
    Recently I resigned job wef 06.04.14 I received My letter of appointment on 18.12.2008 and Letter of Confirmation 01.11.2009 from my last employer. Please tell me whether I am eligible for Gratuity.
    Rgds,
    Sathya,…

  7. My basic is 4200 & I worked 7 years. lats month salary is 182560- what will be my gratuity.

  8. H.S. Varadagopala Chakravarthy

    My wife working in an organisation since 8 years. She took maternity leave on without pay during 10 months. If she eligible for the Gratuity?

  9. Sir,
    I have with a limited company from 05.11.2009 to 30.06.2014, 4years+ 7months+25days. 30th Jun’2014 of my reliving date. Please advice whether i am eligible for the gratuity.

  10. 2 retired persons from Government Service is serving in our Organization. Please advice, are they eligible for Gratuity? they have completed 5 years of service in this organization.

  11. hi
    My joining date 31/12/2010
    if last working date31/12/2014
    can i able to receive gratuity
    sir plz reply

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