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Former Member

Gratuity payment Accorind to the Law

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

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2 Answers

  • Best Answer
    Aug 20, 2015 at 07:24 AM

    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!

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    Former Member
    Aug 19, 2015 at 12:14 PM

    Hi,

    How are you calculating gratuity year?

    Regards,Sankarsan

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    • Former Member Former Member

      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