Gratuity [Thread 266952]

Seniors please let me know ,how we can calculate gratuity ,

Rajesh - you have lots of good explanations and some very good excel sheets.. i would recommend a search through keyword Gratuity

simple formula for calculating gratuity is : last salary drawn divided by 26 multiplied by 15 and again multiplied by the number of years service.

Gratuity settlement amount would typically depend on the circumstances under which the withdrawal is made:
In the event of completion of certain minimum tenure in the organization it is calculated as shown below :
15/26 * No. of Years of service (To be rounded to nearest integer)* Last drawn Basic Salary E.g. Mr John No of Months of service = 67 months and Last Drawn Basic Salary amounted INR. 20000
or 15/26 * 6 * 20000 =

In the event of decease of the employee:
15/26 * No. of Years Left of service (To be rounded to nearest integer)* Last drawn Basic Salary E.g. Mr John works for three years followed by untimely decease and Last Drawn Basic Salary amounted INR. 20000 At the time of Death assume age of 35 years. Service Provider will compute gratuity for the remaining service period. Thus 58 (assume Superannuation Age)-35(Current Age) = (23 years left of service + 3 years of service rendered) * 15/26 * 20000

Hope this Helps.

Can you detail the gratuity calculation in case of death of employee while in service? I have not seen such provision in the Payment of Gratuity Act. The Act only says that if an employee dies he shall be given gratuity without considering whether he has completed five years continuous service or not. That means, if an employee dies after completing only 3 years, his legal representative should be paid gratuity even though the employee had not completed five years of service and the amount of gratuity shall be calculated in the same manner when it becomes due in other cases. There is no mention of remaining years service under the Payment of Gratuity Act. Of course, there may be companies which have adopted such formula for calculation of gratuity and it is purely their internal matter.
Regards,
Madhu.T.K

simple formula helps me alot to calculate gratuity..please let me know after how much period of service we can provide gratuity to the employee...

Dear Member,
If you want to give gratuity amount which is over and above the Payment of Gratuity Act then you can pay gratuity on any period of service.
With Regards,
R.N.Khola

To arrive one day wages ,Last drawn wages/26
To arrive yearly gratuity,Multiply by 15
To arrive gratuity for total years of service,multiply by No. of years of service.
Thanks
N Kannabiran

actually i want to know that why we divide the last drawn salary with 26 and then multiply with 15. what is the logic behind that?

We divide the monthly salary by 26 in order to get daily average salary. As it is more beneficial for employees when daily wages is arrived at after dividing the monthly salary by 26 rather than 30 the Act has provided for 26 as divisor.
Regards,
Madhu.T.K