Hello HR Professionals,
I Would like to Implement Gratuity Benefits for our Employees as per, The Payment of Gratuity Acts 1972. As per the Act, Gratuity formula is = No of Years of Services * Last Drawn Basic+DA*15/26. I have some doubts regarding the same, How we will consider Basic for Calculation In case of any employee who has basic salary e.g 45,000 (Basic +DA but his Basic is restricted to PF as 15,000? Which Basic Needs to be considered while calculating his Gratuity. Please Explain.
From India, Mumbai
1I Would like to Implement Gratuity Benefits for our Employees as per, The Payment of Gratuity Acts 1972. As per the Act, Gratuity formula is = No of Years of Services * Last Drawn Basic+DA*15/26. I have some doubts regarding the same, How we will consider Basic for Calculation In case of any employee who has basic salary e.g 45,000 (Basic +DA but his Basic is restricted to PF as 15,000? Which Basic Needs to be considered while calculating his Gratuity. Please Explain.
From India, Mumbai
Dear Sonal,
EPF( MP)Act,1952 and the PG Act,1972 are separate legislations exclusively for different types of statutory terminal benefits of industrial employees. EPF is a fund created out of periodical mutual contributions made by the employer and employee whereas gratuity is a one-time-lump sum terminal benefit payable solely by the employer towards which the employee has nothing to contribute. As per the PG Act,1972, there is ceiling only on the maximum amount of gratuity payable not on the factors for calculation.
Therefore, you have to adopt the method of calculation of gratuity as set down by the respective Act only.
From India, Salem
EPF( MP)Act,1952 and the PG Act,1972 are separate legislations exclusively for different types of statutory terminal benefits of industrial employees. EPF is a fund created out of periodical mutual contributions made by the employer and employee whereas gratuity is a one-time-lump sum terminal benefit payable solely by the employer towards which the employee has nothing to contribute. As per the PG Act,1972, there is ceiling only on the maximum amount of gratuity payable not on the factors for calculation.
Therefore, you have to adopt the method of calculation of gratuity as set down by the respective Act only.
From India, Salem
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