Image Source : PIXABAY One will not get the gratuity in case he leaves the job before completing 5 years.
Gratuity Calculator: If you work in a company for several years, the company can give you a gratuity. But gratuity is not given to every employee as the government has made some rules for it. Only those employees who fulfil these conditions get its benefit.
What is gratuity?
Gratuity, in simple words, is a token of appreciation given by employers to those employees who stay with the company for a long time. The payment of gratuity is government by the Gratuity Act 1972. This legislation states rules, how gratuity is calculated and other related details. This applies to various sectors including government departments, defence and others.
Eligibility for gratuity
As per the current rules, if an employee works in a company for continuous five years, he becomes entitled to receive gratuity. Therefore, one will not get the gratuity in case he leaves the job before completing 5 years.
What does the Payment of Gratuity Act, 1972 say?
Under the Payment of Gratuity Act, 1972, the benefit of gratuity is given in companies where at least 10 or more employees work. Even if a company does not come under this Act, it can still give gratuity to its employees.
Exceptions to the Five-Year Rule
In case of termination due to death or disablement, an employee will be eligible for the gratuity regardless of service length. Also, employees can qualify for the gratuity in four years and 240 days under certain conditions.
How to Calculate Gratuity?
The gratuity of an employee depends on his tenure and last salary. The formula to calculate gratuity is – (15 × Last Drawn Salary × Number of Working Years) / 26
Gratuity on basic salary of Rs 50,000 with job tenure of 10 years
As per the above-mentioned formula, the gratuity of an employee would be around 2,88,461
It is important to know that if an employee has worked for more than 6 months in a company, his service period will be considered as a full year.
If you work in a company for several years, the company can give you a gratuity. But gratuity is not given to every employee as the government has made some rules for it. Only those employees who fulfil these conditions get its benefit.
What is gratuity?
Gratuity, in simple words, is a token of appreciation given by employers to those employees who stay with the company for a long time. The payment of gratuity is government by the Gratuity Act 1972. This legislation states rules, how gratuity is calculated and other related details. This applies to various sectors including government departments, defence and others.
Eligibility for gratuity
As per the current rules, if an employee works in a company for continuous five years, he becomes entitled to receive gratuity. Therefore, one will not get the gratuity in case he leaves the job before completing 5 years.
What does the Payment of Gratuity Act, 1972 say?
Under the Payment of Gratuity Act, 1972, the benefit of gratuity is given in companies where at least 10 or more employees work. Even if a company does not come under this Act, it can still give gratuity to its employees.
Exceptions to the Five-Year Rule
In case of termination due to death or disablement, an employee will be eligible for the gratuity regardless of service length. Also, employees can qualify for the gratuity in four years and 240 days under certain conditions.
How to Calculate Gratuity?
The gratuity of an employee depends on his tenure and last salary. The formula to calculate gratuity is – (15 × Last Drawn Salary × Number of Working Years) / 26
Gratuity on basic salary of Rs 50,000 with job tenure of 10 years
As per the above-mentioned formula, the gratuity of an employee would be around 2,88,461
It is important to know that if an employee has worked for more than 6 months in a company, his service period will be considered as a full year.
