Dear ALL, Request you to please keep me posted regarding the calculation of Gratuity. we should calculate the Gratuity on gross Salary or on Basic Salary? Would await reply. Regards, Shweta Mehta
From India, Ahmadabad
From India, Ahmadabad
Hi, Count gratuity on basic salary not on gross Here is the formula i m sending it You can calculate gratuity as per the formula given below: Basic * 15 / 26 * years = Gratuity not more than 3.5 lacs Basic = Last Drawn Basic 15 = No. of days 26 = 26 working days in a month Year = Year of serivce which should be more that 5 years of continous employment
From India, Mumbai
2From India, Mumbai
Please remember that Gratuity is calculated on gross salary comprising of Basic salary and Dearness Allowance which may be Fixed or Variable. If a company doesnot give DA, then gratuity can be calculated on the Basic Salary alone (the salary on which the EPF is deducted and contributed) Regards, Madhu.T.K
From India, Kannur
From India, Kannur
Hi, Employee who completed 4 Years and 240 Days are also eligible for Gratuity. Regds Surender
From United States, Salt Lake City
From United States, Salt Lake City
Dear Sunder, The matter of 4 years + 240 days is disputed. In P. Raghavalu and Sons Vs Additional Labour Court, Andhra Pradesh, it was decided that employee who has worked for 4 years 11 months and 10 days was not eligible for gratuity. The thing is that in order to be eligible for gratuity one should have completed 5 years of service counted from the date of joining. 240 days is taken for determining his continuous service wherein one who had worked for 240 days (above the ground) and 190 days (below the ground) will get gratuity for that year. There is yet another ruling that one who is eligible for gratuity by reason of his more than 5 years of service but who had in between a particular year during which he had not worked for 240 days, shall be given gratuity for that year provided he had worked actually for at least 190 days. I also understand that there was a verdict in support of your view in Delhi, I think. But the details are not available as to whether any superseding verdict by higher court is in force. Regards, Madhu.T.K
From India, Kannur
From India, Kannur
can you guide me how gratuity is calculated % wise at the time calculating CTC of the employee. In my previous company is use to calculate by 4.16% and in the company where i joined now gratuity is calculated at the rate of 4.83% why is the difference?
From India, Pune
From India, Pune
Dear Brijesh, I believe that gratuity cannot form part of salary. It becomes due only when the employee leaves after 5 years of continuous service or dies while in service. In both the cases the payment to be made by the employer is 15 days salary for every completed year of service. While calculating the years of service (beyond 5 years) fraction of service of six months and more should be considered as one year. As such an employee leaving service after 8 years and 7 months from his date of joining will get gratuity for 9 years and suppose his salary (Basic + DA) at the time of leaving is Rs 12000, then the amount payable to him will be: Rs.12000X 15 days X 9 years / 26 days or Rs 62,307.69 The amount of gratuity never accrues. Therefore, you cannot make an assumption as to this will cost to the company (CTC) by way of gratuity. I personally feel that the concept of showing gratuity as part of salary, of course CTC, is basically wrong. For details please visit my blog entry titled " CTC Vs BTC" Regards, Madhu.T.K
From India, Kannur
From India, Kannur
Hi Gratuity is calculated on basic pay plus dearness allowance. If there is no element of dearnes allwance in the salary, as is the case of some private sector employees, then the salary constitutes the basic pay only. As far as the gratuity being a part of CTC, this practice is being followed in private/multi national organisations, where they add each and everything, which they are to pay to maintain the employee as part of CTC. Now a days, the firms take a Group Gratuity Insurance Policy and the premium paid constitute the part of CTC. Even in PSUs while calculating the financial effect at the time of pay revision etc.,, such an exercise is undertaken to find out what it costs to the company. If am wrong, anyone is welcome to corrtect me. Regards Karath AK Manager (HR)
From India, Gurgaon
From India, Gurgaon
Dear Friends, I agree with Mr.Madhu's remarks. Gratuity is not a part of slary and of course, now a days in order to show the high pay package many employers are including any thing and everthing like, Gratuity, Performance bonus etc., They will show only in appointment order but actually if the concerned employee leaves the organisation he is not eligible for the gratuity eventhough they mentioned in appointment order as annual salary. And in many company performance bonous there will be no policy and no formula but still they will add in ctc. I have one question here. IF the employee leaves the organisation before completing 5 yerars and as per his appointment letter gratuity mentioned annually as a part of salary, InThis case Is company is liable to pay gratuity? Please clarifty. Thanks & Regards, Krishna Prasad Manager - HR & Admn.
From India, Bangalore
From India, Bangalore
If gratuity is taken as part of salary and every month an element of gratuity is deducted from the gross salary then then employer will be liable to pay the amount so deducted as gratuity to the employee when he leaves the organisation even before completing the required period of five years. Certainly, there is no such verdict made by any court so far. But on merits of the case it appears to be a deduction not authorised by Payment of Wages Act. Regards, Madhu.T.K
From India, Kannur
From India, Kannur
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REQUEST FOR DEDUCTION OF GRATUITY AMOUNT (2).pdf
Gratuity Form I.doc