MINI Gratuity Calculator

Gratuity Calculator

Gratuity is a cash benefit provided by an employer to an employee for the services rendered to the organization. It is paid at the time of retirement, resignation, layoff or termination, provided the employee has completed five years of continuous services before leaving the organization. In certain cases, such as death or disablement, the rule of continuous 5-year service is relaxed.

You can use the gratuity calculator to estimate the amount of money you will receive if you are planning to leave a job after a minimum of five years of services or looking forward to your retirement. There are various rules for gratuity calculation that you should keep in mind beforehand. We will look at various rules that will help you estimate your gratuity amount so that you can plan your investments better upon receiving the money.

Employees covered under the Act

Using the two important parameters – number of years of service and last salary drawn, you can calculate the gratuity as follows –
Gratuity = Last drawn salary x (15/26*) x Number of years of service
*the number of working days per month is taken as 26 days.
** gratuity calculation is done at the rate of 15 days wages

Last drawn salary should be carefully calculated to account for the following components –

1. Basic
2. Dearness Allowance – for government employees
3. Commission received on sales

Example: If you had been drawing Rs 80,000 as your last basic salary with 10 years 4 months of employment tenure, then the gratuity amount you will receive as per the formula is:

Gratuity = Rs 80,000 x (15/26) x 10 = Rs 4.62 lakhs

The 4 months is below 5, so is rounded off to 10. Months more than 5 are rounded off to the next year.