Gratuity Calculator — Payment of Gratuity Act, 1972
Gratuity is a statutory payment, not a discretionary bonus. If you have completed five years of continuous service with an establishment covered by the Payment of Gratuity Act, 1972, it is payable on resignation, retirement, death or disablement. Enter your last drawn salary and length of service.
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How gratuity is calculated
For an establishment covered by the Act, the formula is fifteen days’ wages for every completed year of service, taking a month as 26 working days: (15 ÷ 26) × last drawn basic and dearness allowance × years of service.
Service of six months or more in the final year is rounded up to a full year. Five months is not. For establishments outside the Act, the calculation typically uses a 30-day month and does not round up.
The statutory ceiling is ₹20 lakh. Anything above that is at the employer’s discretion, and is taxable.
Who is eligible
The Act applies to factories, mines, plantations, ports, railways, shops and establishments employing ten or more persons. Once covered, an establishment stays covered even if numbers later fall.
Five years of continuous service is required — except where employment ends because of death or disablement, in which case gratuity is payable regardless of length of service.
Resignation, retirement, superannuation and termination all attract gratuity. Termination for misconduct causing damage or involving moral turpitude can result in forfeiture, wholly or in part.
If your employer refuses to pay
Gratuity must be paid within 30 days of becoming payable. Beyond that, simple interest is payable on the amount.
The route is an application to the Controlling Authority under the Act — usually the Assistant Labour Commissioner — using Form N. This is a statutory remedy and does not require a civil suit.
Keep your appointment letter, salary slips for the final month, resignation acceptance and relieving letter. The dispute is usually about the last drawn basic figure or the date service began.
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