Often people get questions about gratuity, what is it? How it is calculated, who benefits from it. Does every employee get the benefit of gratuity? Through the Payment of Gratuity Act, 1972, it benefits every employee of an institution where more than 10 employees work. If the employee changes the job, retires or quits the job due to any reason but fulfills the rules of gratuity, he gets the benefit of gratuity.

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First of all, what is gratuity?
Gratuity is a pre-defined benefit to an employee. If the employee fulfills certain conditions of the job, gratuity will be paid to him under a prescribed formula in a guaranteed manner. If you work in an institute repeatedly for 5 years, then you get the benefit of gratuity. Although in most cases, it is redeemed after retirement, in certain circumstances, it can be acquired even earlier. Gratuity not paid to the employee on contract - An employee who is associated with a company on the contract does not get the benefit of gratuity, recently some companies give all kinds of benefits to their employees even if they are on contract.

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How to calculate gratuity - For every year of service of any employee, the institute will give an amount equal to 15 days of the previous salary as gratuity. Salary means (basic salary + dearness allowance + commission) if a commission is a special percentage of sales. In addition, an employee who has worked for more than 6 months from the last year of his / her service can be considered for a full one year for the calculation of gratuity. For example, think of it like this ... Suppose, if an employee works in his institute for 5 years and 7 months, then the calculation of gratuity will be done on the basis of 6 years of service. A month of work is considered as 26 days for gratuity calculation. Therefore, 15 days salary is also calculated on the same basis (monthly salary x15) / 26. Gratuity calculation is multiplied by the number of years of service. The same formula is also adopted for calculating gratuity at retirement.

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Under this formula, if an employee works for more than 6 months, it can be calculated as one year. For example, if an employee works for 7 years 8 months, he will be considered as 8 years and on this basis, the amount of gratuity will be calculated. At the same time, if an employee works for 4 years 3 months, then he will be considered as 4 years and the amount of gratuity can be calculated on this basis. Whatever amount of gratuity is deposited is given to his nominee or legal heir. What is the condition of the death of an employee? Gratuity is calculated - if an employee dies before completing 5 years of service, then the five years of service formula will not apply to him. Gratuity paid on how many days - Employers have to pay gratuity within 10 days of the last day of the employee's job. If there is a delay of more than 30 days, the employer may have to pay interest on it.