Gratuity - If staff completes 6 yrs 5 months of services. How to round off the total working years?

If a staff member completes 6 years and 5 months of service, how should the total working years be rounded off when calculating gratuity?

Dear Vinutha-Nayak,

For 5 years & 5 months of service, gratuity is payable for 5 years. Please read section 4(2) in which it is stated that for every completed year of service or part thereof in excess of six months, the employer shall pay gratuity to an employee.

What does it mean if an employee works for more than 6 months in a year, that year shall be considered a full year for the payment of gratuity. Six months and less shall be ignored.

Dear Vinutha-Nayak,

Akhil's statement is self-explanatory. For 6 years and 5 months of service, gratuity is payable for 6 years. For completion of 7 years, 240 working days are required.

Sumit

Dear colleague,

In the instant case, gratuity is payable for 6 years. As per the Act, 6 months or more, after initial 5 years of service, is treated as one year's service. In your case, 5 months' service will be disregarded. Had the person completed 6 months or more, gratuity would have been payable for 7 years.

Regards,
Vinayak Nagarkar
HR and Employee Relations Consultant

Dear Vinayak Nagarkar,

You are right. I made a mistake in reading it as 5 years and 5 months, and accordingly, I responded 5 years. It is actually 6 years and 5 months, so the correct answer is 6 years.

Thank you.

I have completed 5 years.
Please help.

Dear colleague,

You have stated that you have completed five years of service. However, the payslip attached shows your DOJ as 2406/2414, which is short of five years. Gratuity is payable for five or more years of service and upon cessation of employment. Apparently, you are not yet eligible for gratuity.

Regards,
Vinayak Nagarkar
HR and Employee Relations Consultant

Hi, I do not know whatever the hell this dearness allowance and stuff is. The simplest approximation of calculations is half of the last drawn wage multiplied by the number of years. Now, I chose not to be on the payroll simply because I want to avoid this governmental red tape, especially concerning PF and other things. I'd rather be without these benefits than have to deal with the bureaucracy.

So coming to the question, I am drawing a fixed X amount without any sub-categories like HRA or other jargons and have remained on an auto-renewed contract for over 7 years in an organization. I have been receiving my pay hikes and promotions like any other employee, but my pay structure has remained without sub-categories. So I want to know whether the gratuity is approximately half-a-month's salary multiplied by the number of years worked or if the employer will try to give a workaround by saying that the "Basic" of that X is only 20% of X, resulting in 1X/10 multiplied by the number of years.

First of all, mind your language. We are a group of professionals interested in being of use to fellow HR enthusiasts. Your professed loathing for all officialese is contradicted by your sudden fondness for confirming gratuity formulations.

However, the formula is: Gratuity = {(Basic + DA) / 26} x 15 x the number of completed years of service. To calculate the monthly wage (last drawn Basic + Dearness Allowance), it is divided by 26 (the per day wage of the employee) and then multiplied by 15 x the number of years of service.