Gratuity Calculation Formula: What is gratuity and how is it calculated, you should also know, that it will be very useful

When you retire from a job, you get a gratuity. That is, you get money in its name. Like the Employee Provident Fund, gratuity also has a contribution from employee and the company. So today we know what is gratuity and how to calculate it. Let's know.

What is gratuity?

If you are retiring from a long job, then you become entitled to gratuity and you get money. However, there is talk of reducing the service period of 5 years to one year. Gratuity is usually received at the time of retirement. But, even if you leave or change the job after five years, you will still get a gratuity. If the employee dies during service or becomes disabled, then gratuity is received even after five years less service.

How is gratuity calculated?

The formula for calculating gratuity is very simple,

Total gratuity = (last basic monthly salary) X (15/26) X (years of job).

For example, you started the job in 2019 and resigned in 2024. At the time of resignation, your basic monthly salary was Rs 50,000. So your gratuity amount will be known like this.

50,000 X (15/26) X 5 = Rs 1,44,230

It is worth noting here that except February, all other months of the year have 30 or 31 days. But, under the Payment of Gratuity Act, 1972, the working days of four weekly holidays have been fixed as 26 days.

Disclaimer: This Content Has Been Sourced And Edited From [Jagran.Com]