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Gratuity: Gratuity is a reward that an employee gets for working in the same company for at least five years. When an employee works in a company for a long time, he is given a certain amount as a reward by the company for leaving the job after a fixed period. Which is called gratuity. (Employees News)

A minimum time limit of 5 years has been fixed for gratuity in India, that is, if an employee (employee reward) works in a company for 5 years, then he gets a certain amount as a reward from the company on leaving the job. If you have been working in a company for the last 20 years, and now you are planning to leave, then in such a situation, how much gratuity will you get according to the current gratuity rules of the country, let us understand the complete details including calculation.

Rule related to the number of employees-
If 10 or more employees are working in a company, then the company must pay the amount as a gratuity to its employees. This includes both government and private companies. Along with this, shops and factories are also included in its scope.

The company should be registered under the Gratuity Act-
Before applying for gratuity, you must check whether your company is registered under the Gratuity Act or not. If your company is registered, then it will have to pay you gratuity as per the rules, but if the company is not registered, then it depends on the company's wish to pay gratuity or not.

In India, a minimum of 5 years of service is required for gratuity. If an employee has worked in the company for 4 years and 8 months, then it will be counted as 5 years and he will be entitled to gratuity. However, if he has worked for 4 years and 7 months, it will be considered as 4 years and he will not be able to take gratuity. The notice period is included in the total days of the job.

If the employee dies while on the job-
If an employee dies before retirement or leaves the job, then the company will have to pay gratuity to the nominee of the employee. The minimum time limit rule will not apply here.

This is the rule to calculate gratuity-
There is a rule to calculate gratuity - (Last salary) x (How many years worked in the company) x (15/26). The 4 Sundays in a month are not counted as a week off, due to which only 26 days are counted in a month and gratuity is calculated based on 15 days.

For example, if an employee worked in a company for 20 years and his last salary was around 50 thousand rupees, then to find out the amount of his gratuity, we will apply this formula.

How much gratuity will the employee get on this formula?

Last basic salary: Rs 50,000

Job tenure: 20 years

Basic salary X Job tenure: 50,000 X 20 = 10,00,000

(Basic salary X Job tenure) X15/26=10,00,000 × 15/26= Rs 5,76,923 i.e. Rs 5.76 lakh

With the help of the above formula, it is very easy to calculate gratuity. Using your last drawn basic salary and the duration of the job, you can estimate the gratuity amount you will get on leaving the job.

It is worth noting that the employees of private companies do not get the benefit of dearness allowance like government employees, so in the above formula, gratuity calculation is done using only the basic salary instead of the last salary.

Suppose the employee's last salary is around Rs 50,000. In which the basic salary is Rs 25,000, then the gratuity received from the above formula based on basic salary will be as follows.

Gratuity calculation-

Last basic salary: Rs 25,000

Job tenure: 20 years

Basic salary X Job tenure: 25,000 X 20 = 5,00,000

(Basic salary X Job tenure) X15/26: 5,00,000 × 15/26= 2,88,461.53

At present, some companies fix the amount of gratuity for their employees in advance. In such a situation, the possible amount to be received as a gratuity by employees who have worked in the company for 5 years or more is fixed.

Disclaimer: This content has been sourced and edited from Hr Breaking. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.