Gratuity Calculation and Formula:
The central government has made a big change in the rules of gratuity payment of employees. According to the Labor Code passed from Parliament, now five years of service will not be mandatory for employees for the amount of gratuity. Employees who are on contract, if they leave the job before five years, will be paid gratuity on a pro-rata basis.
As per the provisions of the Labor Code, in the event of the retirement, resignation, termination of the employee, the employee will be entitled to a gratuity according to the number of days he has worked. During the introduction of the bill in the Lok Sabha, Labor Minister Santosh Gangwar said on bringing fixed-term employment into the IR Code, that the service conditions, salary, leave and social security of fixed-term employees are also same as a regular employee Must be the same. In addition to this, fixed-term employees have also been given the right to pro-rata gratuity.
Now it is important to know what is the current formula for calculating the amount of gratuity. That is, on what basis it is calculated. In fact, under the Payment of Gratuity Act, 1972, it benefits every employee of an institution where more than 10 employees are employed. Work. If the employee changes the job, retires or leaves the job due to any reason but meets the rules of gratuity then he gets the benefit of gratuity.
No longer will have to wait 5 years for gratuity, know government’s law
Gratuity formula
Currently, gratuity is calculated on the basis of a fixed formula. Standards have been set in this. Understand its calculation. Total gratuity amount = (last salary) x (15/26) x (how many years worked in the company). Now since gratuity will be available even before 5 years after the current changes, the salary will be calculated on a pro-rata basis. That is, this calculation will be based on the number of days you worked.
Understand with an example.
Suppose an employee worked in the same company for 5 years. The final salary of that employee is Rs 50,000 (including basic salary and dearness allowance). Here only 26 days in a month are counted because it is believed that 4 days is a holiday. At the same time gratuity is calculated on the basis of 15 days in a year.
Amount of total gratuity = (50,000) x (15/26) x (10) = 1,44,230
However, if the employee is on contract and has worked less than 5 years, then his gratuity will be calculated on a pro-rata basis. In which the final salary will be calculated on a pro-rata basis.
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What is gratuity?
If an employee works for a long time in a company, he gets gratuity in addition to salary, pension and provident fund. Gratuity is an honour an employee receives from a company. An employee who fulfills certain conditions is entitled to this reward. The company deducts a small part of the gratuity from the salary of the employee, but the major portion is given by the company.
Source: www.financialexpress.com
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