Gratuity payment Accorind to the Law

[chandra_sekhar96]

Dear Experts,

Need your help to understand Gratuity Payment for Number of Years of Service.

If Employee works More than 6 months say 6.6 years system should consider it as 7 years and Paying the same.

At present System taking the exact Years if employee works below 6months for Exp : 6.5 years it is taking 6.5 years and Making the payment.

Now User came and said He wants to Round down the nearest value if employee works below 6 months. Ex : Emp worked for 6.5 years system should round down to 6 years and should make the payment itseems.

please let me know what is the Gratuity Payment as per Law. Should System round down the nearest Value or it has to pay exact num of years if employee works below 6 months.

Need Clarity. As it is a big burning issue and it involved for Auditing.

Need your Expert Advise on gratuity rules as per law.

Regards,

Sekhar

[former_member201807 · Accepted solution]

Dear All,

Gratuity calculation = (Last drawn Basic Salary + Dearness allowance (if any)*15/26)* completed years

Completed years

1. 1. Continues services more than 5 years in one employer (As per Gratuity act 1972)
2. 2. If work more than 6 month treated as complete year (As per Gratuity act 1972)
3. 3. If work less than 6 month treated as zero (As per Gratuity act 1972)

Example:-

Case1)

If employee has completed years = 5.6 years & his last drawn basic salary Rs. 20000/-

Gratuity calculation = (Last drawn Basic Salary + Dearness allowance (if any)*15/26)* completed years

Last drawn Basic Salary= Rs. 20000/-

Completed years= 5.6 = 6 Years

=(20000*15/26) * 6

Case2)

If employee has completed years = 5.5 years & his last drawn basic salary Rs. 20000/-

Gratuity calculation = (Last drawn Basic Salary + Dearness allowance (if any)*15/26)* completed years

Last drawn Basic Salary= Rs. 20000/-

Completed years= 5.5 = 5 Years

=(20000*15/26) * 5

For more information go through Gratuity Act 1972

Thank you!

[Sanky]

Hi,

How are you calculating gratuity year?

Regards,Sankarsan

[chandra_sekhar96]

Hi,

Its According to the Standard Rule more than 4.8years of Service, employee is eligible for Gratuity Payment.

Regards,

Sekhar.

[Sanky]

Hi,

You can calculate your gratuity year based upon the custom PCR while you will be going to pay the gratuity.

Maintain the date of joining and date of leaving in the IT41 as date type and then in the below custom rule you can calculate. Suppose you are maintain Wage type 3000 in the IT15 where you will be paid at the time of separation and we are maintaining amount as 1

ZTST

3

  3005

           NUM=FXXJ

           NUM-FYYJ

           ADDWT&VAR1

           NUM=& VAR1

           NUM?5

                  <

                     ADDWT *

                  *

                     AMT=& VAR1

                     ROUNDA+100

                     ADDWT 3005

****

         ADDWT *

In this wage type 3005 you will get the no of year as nearest round off and then you can go for further calculation for amount calculation.

Here XX and YY is the date type of DOL and DOJ.

Check and let me know.

Regards,

Sankarsan

[chandra_sekhar96]

Hi Sankarshan,

In our project we are not maintaining WT in info type 15.

We are Paying Gratuity in Info type 0008.

We are checking the Gratuity eligibility days 1700 .

I want to know, what is the Gratuity rule...If employee works below 6 months should system round down the amount and pay or should pay exact number of Service.

Please let me know.

Regards,

Sekhar

[venkateshorusu]

It should round to nearest value. above 6 it goes nearest upper value below 6 it comes to nearest lower value same has been designed in PC00_M40_TERM transaction as well.

Regards

Venkatesh

[chandra_sekhar96]

Hi Venkatesh,

You mean to say, IF employee has 6.5 years of experience system should round down to 6 years and vice - versa ? Please reply...

[Sanky]

Hi,

As per my knowledge that if less the equal to 6months then will be zero after completeion of 5years continuos service in the same organization, if more than 6months after completion of 5years continuos service in the same organization then nearest integer value would be the years for gratuity calculation.

Regards,

Sankarsan

[venkateshorusu]

Yes.

Go through below links as well.

Regards

Venkatesh

[Sanky]

Hi,

If your query is answered then close the thread with correct answer marking.

Regards, Sankarsan

[chandra_sekhar96]

Hi Sankarsan,

Where we need to insert this pcr ?

Is their any PCR we need to put infront of this PCR  to check eligibility ?

Please Confirm.

[Sanky]

Hi

It's all ready closed. Not understand why are you looking for PCR placing in schema?.

Is it your requirement not completely closed?

Please reopen the thread which will be good for others?

Regards,Sankarsan