Gratuity Calculator: You are working in a company and currently your basic salary is Rs 35 thousand. You have completed 12 years of working in that company. Do you know how much gratuity amount has been deposited with the company after working for 12 years. If you work in a company continuously for 5 years then you become entitled to gratuity. After working for 5 years or more, you will be given gratuity amount along with other funds at the time of changing company or at the time of retirement. Gratuity is paid guaranteed under a prescribed formula. A small part of gratuity is deducted from the employee’s salary, but the major part is given by the company.
Gratuity means payment by a company or firm to its employee as a reward for the services rendered for a long period in that company. However, the amount of gratuity is given only to those employees who have been working in the company for 5 years or more. It is governed by the Payment of Gratuity Act, 1972. If an employee becomes disabled due to an accident or illness, he can get gratuity before 5 years. Gratuity mainly depends on your last basic salary and years of service rendered to the company.
How to calculate gratuity amount?
Gratuity mainly depends on your last basic salary and the total years of service you have rendered in the company. Suppose you have worked in a company for 12 years and your basic and dearness allowance together is currently Rs 40,000. If you want to know how much amount of gratuity has been prepared till now, then you can easily calculate it with this formula.
Gratuity amount = (final salary) x (15/26) x (number of years worked in the company).
Here only 26 days are counted in the month, because it is believed that 4 days are holidays. Gratuity is calculated on the basis of 15 days in a year. By filling the amount of the above example in this formula, the calculation will be like this:
Total gratuity amount = (35000) x (15/26) x (12) = Rs 2,42,308
That means, if an employee with latest basic salary of Rs 35,000 works for 12 years, then by now his gratuity amount would have been Rs 2,42,308.
more or less than 6 months
Under this formula, if an employee works for more than 6 months then it will be calculated as one year. For example, if an employee works for 8 years and 7 months, then it will be considered as 9 years and the amount of gratuity will be calculated on this basis. At the same time, if one works for 8 years and 5 months then it will be considered only for 8 years. If an employee dies before retirement or leaving the job, then the company will pay the gratuity to the employee’s nominee.
Payment of Gratuity Act, 1972
Under the Payment of Gratuity Act, 1972, this benefit is available to every employee of those institutions where more than 10 people work. If an employee changes job, retires or leaves the job for any reason, but he fulfills the gratuity rules, then he gets the benefit of gratuity. Once an organization or establishment comes under the Gratuity Act, its provisions apply to it, even if the number of employees subsequently reduces to less than 10.
Before applying for gratuity, you should check whether your company is registered under the Gratuity Act or not. Because if your company is registered, then it will have to pay you gratuity as per the rules, but if the company is not registered then whether to pay gratuity or not depends on the willingness of the company.
