Gratuity Calculation: Did you leave the job before 5 years? Even then these people will get the full amount of gratuity..

Gratuity Calculation: People doing private jobs often have questions and confusion about gratuity. It keeps coming to mind that gratuity is available only after 5 years? Usually, gratuity is paid only after 5 years of continuous service, but in certain circumstances, this timing is not necessary. For example, if an employee dies or becomes permanently disabled, then the amount of gratuity can be given to him or his dependents even before 5 years. So this is the reason why it is important that every employee has the correct information about the rules related to gratuity.

What is gratuity?
Gratuity is considered a kind of thanks or reward that an employer gives to their employee for working continuously in the company for a long period. It is a lump sum payment. It also comes under the 'Payment of Gratuity Act, 1972', which is made with the aim of providing financial security to all employees at the time of retirement. It is not a part of the salary of any employee, but is an extra benefit.

What is the important eligibility for gratuity?

Actually, according to its act, the first and most important condition for getting gratuity is that the employee has worked continuously for at least 5 years in the same company. This rule applies to getting gratuity after retirement, resignation, or leaving the job. So if any employee leaves the job before 5 years, then they generally cannot be entitled to gratuity.

Can gratuity be received for less than 5 years of service?

Although most people think that it is necessary to work for at least 5 years to get gratuity, this is not always true. Because at times this rule does not apply. So if an employee dies during service, then gratuity can be paid to his nominee regardless of the service period. Similarly, if someone becomes permanently disabled due to an accident or serious illness while working, then they can also have the full right to get gratuity.

What does 5 years of continuous service mean?

'5 years of continuous service' has been clarified in the 'Payment of Gratuity Act, 1972'. If an employee has worked for 240 days or more in the last year, they will be considered as having completed 5 years of service for that year. For example, if an employee has worked for 4 years and 240 days, he will be considered as having completed 5 years of service for gratuity calculation.

How is gratuity calculated?

If you want to know how much gratuity you will get on leaving the job, then the simple formula is: (Last salary × 15 / 26) × years of service. Last salary includes your basic salary and dearness allowance (DA). According to the Gratuity Act, the calculation is done on the basis of 15 days' salary, assuming 26 working days in a month. For example, if your last salary is ₹35,000 and you have worked for 7 years, then you can get ₹1,41,346. In this, gratuity up to maximum of ₹ 20 lakh can be availed tax free.

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