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How to calculate gratuity: Gratuity is a lump sum financial compensation given to employees upon termination or retirement. To avail gratuity, minimum 5 years of service in any one company is required. In which the company rewards its employees for working at one place for a long time. However, for this it is necessary to follow some conditions.
Contribution of both company and employee in gratuity
In gratuity, the employee has to pay some part of the salary like EPF. However, a larger portion is allocated by the company. In which it is necessary to work in the same company for at least five years. This amount is given in lump sum to the employees at the time of retirement or leaving the job.
Who gets the benefit?
This benefit is provided to every company with more than 10 employees under the Payment of Gratuity Act, 1972. If the employee changes job or retires, he gets benefits under gratuity rules. But if the company is not registered then giving the benefit of gratuity or not depends on the wish of the company.
Calculate gratuity like this
Gratuity mainly depends on your last salary and total years of service in the company. You can use the gratuity calculator to calculate this. Suppose you have worked in a company for 15 years and your total salary including basic salary and dearness allowance is Rs. Is 40000. If you can calculate gratuity like this.
Total gratuity amount = Last salary
=40000x 15/26 x 15
= Rs. 3,46,154
Note: 26 days of the month are counted for calculating gratuity. Four days holidays are not counted. Graduation is calculated on the basis of 15 days in a year.
If you work more than 6 months, it will be counted in one year.
Under this formula, if an employee has worked for more than six months, then only 1 year is counted while calculating it. If the employee dies before retirement or before leaving the job, the company pays gratuity to the employee’s nominee.
