Gratuity: Check Eligibility, Gratuity Formula, Calculation

Gratuity refers to a one-time monetary benefit that the employer pays to their employee for the services offered by the employee. According to the Payment of Gratuity Act, 1972, to become eligible for the gratuity payout, the employee has to complete at least five consecutive years of service with the same employer.

1 Star2 Stars3 Stars4 Stars5 Stars (1 votes, average: 5.00 out of 5)

One of the prime contributors for this blog. I have 5 years of experience in SEO, Digital Marketing, Content Marketing, and have knowledge in topics like Tax, HR, Recruitment & Staffing. A free-spirit with a passion for travelling & music.

Get Connected with HR Trends

    Comments

    1. comment-author
      Sunil kumar

      I am working with aviation company wat outsourcing. Agreement not continue this year.
      I have completed 4 years and 2 months under gratuity .how total amount. Please suggest.

      Sunil Kumar.

      1. comment-author
        Rishabh Ranjan

        Hi Sunil,

        Employees need to complete 5 years in order to avail gratuity benefit. In the fifth year, employee completes 8 months (240 days) which will be considered as good as one year. So, in your case, until 4 years 8 months are completed in service, you will not be eligible for gratuity.

    2. comment-author
      Kierron Matte

      Hi,
      I found that company shows very small basic amount in the salary slip and no provision for DA. And instead of DA, company shows Fixed allowance in salary slip. That is big loop hole in our country’s Gratuity law. How many people are cheated by Indian companies? 8s this professionalism?

      1. comment-author
        Rishabh Ranjan

        Hi Kierron,

        In this case the employee needs to contact the respective employer. Moreover, the salary structure varies from company-to-company.

    3. comment-author
      Shahrukh ahisrao

      Hi sir muze meri company me 4 Year or 9 moth hogaye he or mene resigned diya he kya muze Gratuity mil sakti he.

    4. comment-author
      D.Indhumathimanuelraj

      Sir my husband had worked in the ramraj cotton show room in 1/4/2013 to 5/5/2014 after resigning again he joined in this instituion1/10/2016 to1/12/2017 please kindly give information is he eligible for gratuity he passed away on 08/04/2020

      1. comment-author
        Rishabh Ranjan

        Hello D.Indhumathimanuelraj,

        Since your spouse passed away after leaving service, he is not eligible for gratuity.

    5. comment-author
      Aijaz khan

      Sir, My Father was working in oriental toll naka and worked for 9 years before his death. So, is his nominee can get Gratuity in his behalf?

      1. comment-author
        Rishabh Ranjan

        Hi Aijaz,

        Nominees are entitled to gratuity. The nominee can contact the employer (oriental toll) for more information regarding this.

    6. comment-author
      RAMESH

      Sir,
      I have been working with a company for the last 11 years and is eligible for the gratuity on retirement. But for the last 7 months company has been paying 50% of the salary . If I resign or I lose my job depending on the present condition, what would be the percentage of Gratuity company will provide on my retirement. Is it on the base of my previous salary( that was drawing before 7 months) or the present salary? Kindly advise.

      1. comment-author
        Rishabh Ranjan

        Hi Ramesh,

        The gratuity calculation will be based on the last drawn basic wage. On average, employees get 5.5 months of basic wages as gratuity.

    7. comment-author
      Pankaj Shende

      Nice Article Sir,
      Very informative…

      My previous employer not giving me Gratuity… I worked there for 7 and half years…

      What will be procedure to claim gratuity as employer not interested in giving it…

      Please suggest

      Thank you

      1. comment-author
        Rishabh Ranjan

        Hi Pankaj,

        I suggest you approach the employer with a formal letter. If the employer doesn’t oblige, then you can submit a written complaint at the Labour Office by enclosing the proof of employment.

    8. comment-author
      Bhatnagar P.K.

      Services renderedfrom 1/4/2002 to 30/4/2002
      01/7/2002 to 30/04/2003
      1/07/2003 to 30/04/2004
      1/7/2004 to 30/05/2005
      1/7/2005 till 31/08/2020 whether services rendered before 1/7/2005 be counted towards gratuity

      1. comment-author
        Rishabh Ranjan

        Hi Sangita,

        For the calculation of the 5 years and to become eligible for gratuity, please understand that a single year is assessed as 240 working days for employees working in organisations.

      1. comment-author
        Rishabh Ranjan

        Hi Amit,

        Employees need to complete a minimum of 5 years of service at the same organisation to avail gratuity benefit. For the calculation of the 5th year, a single year is equivalent to 240 working days for employees working in organisations. For those working in mines and other such fields, a year is assessed as 190 days.

    9. comment-author
      Kunal

      I’m working on a 2 year fixed term contract with a company and gratuity is part of my CTC. Is there an application form for fixed term employees to claim gratuity? As per the new laws fixed term employees are eligible for gratuity, but there is no option in the current form I to choose from

      1. comment-author
        Rishabh Ranjan

        Hi Kunal,

        Although Gratuity is a part of CTC, to be eligible for a claim you need to have continuous service that exceeds 5 years. However, the said years will not be considered in case of demise of an employee.

    10. comment-author
      AP

      I worked in a company for 10 years. My date of retirement arrived at the end of 8th year but I was continued to be employed for two more years. Whether calculation of my gratuity will be made on the basis of 8 years or 10 years.

      1. comment-author
        Rishabh Ranjan

        Hi AP,

        Post-retirement, if the employer issued an extension letter with the same employment terms and you continued as a regular employee then you are eligible for 10 years of gratuity.

    11. comment-author
      Bhajan Sen, Siliguri.

      After usual retirement comany raised loss, misdeeds etc. what is the rules for gratity payment as I have already applied my claim with labour dept. More, if complaints by the company with labour court there is any having any rules to deposit gratuity amount to labour court before lodging suchcomplaints.

      1. comment-author
        Rishabh Ranjan

        Hi Bhajan,

        Gratuity amount will be paid to eligible employees as part of Full and Final settlement. If the company is not paying the amount, you can approach the Labour Department with a written claim for your dues. On the basis of the written complaint, the Labour Department authorities will take action against the employer where the settlement will take place in their presence.

    12. comment-author
      Amit

      I have been working in a company since 3 July 1984.i joined the company on fixed salary of 2500 per month in 1995 they have made basic and house rent and travel allowance since 1995 basic was fixed at 13000 per month and in subsequent years they have not increased basic salary and increased only house rent and travel allowance I am 69 now and wish to quit how my gratuity. Will be calculated now my gross salary is 78000
      Regards

    13. comment-author
      Bikash Roy

      After usual retirement can employer raise complaints of misdeed, loss etc.? What are rules of gratuity payment after lodging claim at labour court and what statements will have to produce at labour court at the time of hearing.

      1. comment-author
        Rishabh Ranjan

        Hi Bikash,

        You need to produce the details about: the tenure of employment, settlement received from the employer, statement of dispute.

    14. comment-author
      Biswajit Sarkar

      Myself Biswajit I am working in a automobile company. In our salary there is Basic,HRA,RA and CA is given. No DA. So please guide me whether all those allowance should be considered at the time of gratuity calculation?

      1. comment-author
        Rishabh Ranjan

        Hi Biswajit,

        Basic and Dearness Allowance (DA) alone will be considered for the calculation of gratuity.In case dearness allowance is not part of wages, then gratuity will get calculated on basic.

    15. comment-author
      K. Rohini Rao

      I have worked for 39 years. Is gratuity calculation same for all years or more for years of service rendered above 30 years

      1. comment-author
        Rishabh Ranjan

        Hi Nissar,

        A person is eligible to receive gratuity only if he has completed minimum five years of service with an organisation. However, it can be paid before the completion of five years at the death of an employee or if he has become disabled due to an accident or disease.

    16. comment-author
      Narendra Negi

      Dear sir
      As a personal reasons I have decided resign for my post I have completed more then 4 year 9month. But my employer not refund my gratuity. Also I have join in 2014 in February but my PF deduction in 2015 … So please suggest me what can I do to withdraw my gratuity… I waiting your reply

      1. comment-author
        Rishabh Ranjan

        Hi Narendra,

        You need to approach the employer in writing to provide the gratuity settlement. If the employer does not provide any response, you can approach the Labour Office — with details of employment such as Appointment Letter, Relieving Letter, Latest Payslips, including
        Full and Final Settlement (FnF) statement — and file a complaint against the employer.

        An employee who completes 4 years 240 days is eligible for Gratuity.

        As for the PF, you need to check your payslips to know from which month PF was deducted from your salary.

    17. comment-author
      S.Rajagopal

      I have joined a corpn ltd after exit after
      13 years due to superannuation and
      Getting epfs minimum pension.The employer reject gratuity.Now how can get
      Gratuity whether it is eligible or not.Please
      Explain.

      1. comment-author
        Rishabh Ranjan

        Hi S. Rajagopal,

        Employees who complete 5 years of service in an organization are eligible for Gratuity.

        You can approach your employer and ask the reason for denying the Gratuity benefit. On the basis of the outcome, you can approach the Labour Court by filing a complaint against the employer to claim Gratuity.

    Post a Comment

    Your email address will not be published. Required fields are marked *

    Subscribe For Newsletter

    Subscribe to get the latest news and happenings around recruitment space

    Please hold while we process the request.