Gratuity Rule: How much gratuity will be given after how many years of service, employees must know the rules..

Gratuity Rule: The central government led by Prime Minister Narendra Modi has recently announced the formation of the 8th Pay Commission, which will come into effect from 2026. The main objective of this commission is to revise the salaries, allowances, and pensions of central government employees and pensioners. Along with this, the new Unified Pension Scheme (UPS) has also become effective from April 1, 2025. These changes will also affect gratuity.

Gratuity is a reward that the company gives to its employees for long service. It is available when an employee works continuously in a company. Under the Indian labor law, to get gratuity, the employee must work in the same company for at least 5 years.

4 years 11 months work in the company-

If an employee works for 4 years and 11 months in a company, he will not be entitled to gratuity, even if he is less than a month away from completing 5 years. However, according to the rule, if the employee has worked for 4 years and 8 months, he will be given gratuity considering it as a full 5 years. But if an employee works for 4 years 7 months or less, he does not get gratuity, and his service time is considered as 4 years only.

How is gratuity decided-

Gratuity in the company is based on the basic salary and service years of the employee. It is usually available on retirement, resignation, or dismissal of the employee, provided he has completed a minimum of 5 years of service. The formula for gratuity calculation is:

Gratuity = (Last salary × 15/26) × Number of years of completed service.

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