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Akshata (project analyst)     26 March 2012

Calculate gratuity

can someone help me formulate the gratuity according to the law?  FYI: i was told i am at risk(my role was made redundant and my notice period had started, if i  get hired internally to another team with in the notice period than my association with the company would continue as usual else I will be terminated by end of the notice period).

I tried my best to land an internal job for more than a month and put down my paper when the HR misguided me that I was not eligible for gratuity even if served the complete notice period. With the help of lawyersclubindia members i have come to realize that I am eligible for gratuity but facing obstacles to calculate my gratuity.

In my case would i be considered as terminated? does the formula differe for resignation and termination?

found thisby googleling

  1. Gratuity = Monthly Salary (Basic +DA) x 15 days x No. of yrs. of service/26
  2. *Completed years of service: More than 6 months service will be counted as full year of service i.e. 1 year 7 month will counted 2 years
  3. Max. Gratuity payable under the Act is Rs. 3,50,000*/- * Please confirm it, This is exempted from tax if drawn after the retirement or leaving the job.

is it correct? also there is no DA in my salarty slip, is there a way to calculate it?  from the parameters in my payslip? or i consider it zero?

sample pay slip

 

Earnings Amount Deductions Amount

Basic

House Rent Allowance:

Taxable Allowance

Supplementary Allowance

A

B

C

D

Provident Fund

Voluntary Provident Fund

Income Tax

Transport Deduction

Professional Tax

F

G

H

I

J

Gross Earnings(A+B+C+D) E Gross Deductions(F+G+H+I+J) K

 

 

 

 

 

 

 

 

EARNINGS ANNUAL

Lta

Medical

L

M



Learning

 1 Replies

Kumar Doab (FIN)     26 March 2012

The following is with limited understanding on the post. Some rules may vary from state to state.

Valauable advice of learned experts/members is sought.

Gratuity: an amout given in a gratitude from the employer for any employee towards his good service rendered for the company

Gratuity Limit at the time of retirement is enhanced to Rs. Ten lakh.

Gratuity is payable in case of termination of employment in case of resignation/termination/superannuation/death/disablement due to accident or disease/retrenchment/volountry retirement. (Section: 4,Payment of gratuity.)

Calculated as : 

Basic + DA
----------- X 15 X no of years of service *
26

* If the employee has complected more than 6 months, it will be treated as full year for the purpose of gratuity calculation.

If you do not have DA in your Salary you can calculate Gratuity on the Basic Salary alone. You can also refer to the concerned personnel in HR who shall guide you to company policy on DA and DA component in your salary. If you are located at HO town of Company then O/o Controlling Authority for Gratuity 9 which may be ALC/DLC in your case) can guide you to applicability of DA as per your designation/class of employee and class of industry you are employed in. if at all you want to agitate you may agitate only if there is a logic in line with rules/law of the state and land. You may approach a competent and experience HR consultant of your state for better clarity.

 

Gratuity 4.81 % of basic

Dearness Allowance: Normally seen in salary structure of Govt Orgs, Its calculated based on Consumer Price Index.

Base CPI taken at one reference point
Then  current average CPI at given quarter

DA is % of Basic salary and this percentage is calculated as

DA % = % increase over base CPI

 

 

As pr company Policy: (1) Basic Pay - 2500 and above, HRA will be taken into account, (2) Basic Pay - < 2500, DA will be taken into account.

If basic is 1000+ DA is 800 minimum wages are 1800
can be put it like this (Basic + DA) =1355 & HRA 445 (30 % of basic as per govt pay in the metro cities)

 

First  company decides particular employee's basic pay then refers to Minimum Wages Act and  find percentage of DA for particular category of employee's & then  calculate Basic + DA

 

To find the DA for companies that are covered in Shops and Establishment Act one may refer to notification of Minimum Wages Act applicable to the state.

 

 

If the pay slip does not reflects DA, it is not applicable to be paid along with gratuity, however you cannot go for HRA as it will substantially increase the Gratuity amount and is never done.

In India, Dearness allowance (D.A.) is part of a person's salary. D.A. is calculated as a percent of the basic salary. This amount is then added to the basic salary along with house rent allowance to get the total salary. Rates vary as per rural/urban areas etc.

 


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