Gratuity - Eligibility, Formula and Calculation


Gratuity :- 

If you are working in a Organization, you are given an amount of money from the employer's end in return of the services you offered for the organization.One can get the gratuity amount after the completion of 5 years with the organization.

Eligibility Criteria for Gratuity Payment:-

  • Must served for 5 years with in the organization.
  • Can get the Gratuity Amount after the retirement from the job.

Factors on which Gratuity Payment depends:-

Basically Gratuity Payment depends on two factor :-

1) Last drawn basic Salary.
2) No of years served in an organization.

Gratuity Formula:-

One can calculate his/her Gratuity Amount by using below formula:-

Gratuity = N*B*15/26

N = Employment Tenure Period
B = Last Basic Salary drawn

Gratuity Calculation:-

The Gratuity Calculation depends up on the categories the employee fall on. Employees can be divided in to two categories :-

1) Employees Covered under the Gratuity Act
2) Employees Not Covered Under the Gratuity Act

Gratuity Calculation for Employees Covered Under the Gratuity Act:-

One can use the below formula in order to calculate the Gratuity Amount:-

Gratuity Amount = (15*Last Basic Salary Drawn*Total Tenure)/26
For Example - If your last drawn basic salary is Rs 50,000 and your employment tenure is 30 years, then your Gratuity amount will be :-

Gratuity Amount = (15*50,000*30)26 = Rs 8,65,385 /-

If the total tenure period is 5 year 5 month, Gratuity will be calculated as per 5 year as a tenure period however if it is 5 Years 7 Month, you will get Gratuity amount for 6 years tenure.

Gratuity Calculation for Employees Not Covered Under the Gratuity Act:-

One can use the below formula to calculate the Gratuity Amount Not Covered under the Gratuity Act:-

Gratuity Amount = (15*Last Basic Salary Drawn*Tenure Period)/30.

For Example- If the last drawn basic salary is Rs 50,000 and total employment service is 30 Years then Gratuity Amount will be:-

Gratuity Amount = (15*50,000*30)30 = Rs 7,50,000 /-

In case of the death of an employee, criteria for Gratuity Payment will changed.
Below is the criteria of Gratuity Payment in case of one's death.

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