UBS

Gratuity

What is a Gratuity?

Gratuity is defined as the amount employees receive as a part of their gross compensation at their employee lifecycle from their employer. It’s regulated and compensated under the Payment of Gratuity Act, 1972. It is offered as a token of appreciation for an employee’s services to the company. 

The law applies to establishments with 10 or more employees in the company. To be eligible for gratuity, an employee must have completed at least five years of employment in the company. However, you won’t get any compensation in the case of employee disability or death due to an accident or severe illness.

For employees who fall under the Gratuity Act, the formula used for calculating the gratuity amount is as follows:

Gratuity = (Years of service x Last drawn salary)15/26, where the last drawn salary includes basic salary and dearness allowance.

For employees not falling under the Gratuity Act, the formula used for calculating the gratuity amount is as follows:

Gratuity = (Years of service x Last drawn salary x 15)/30, where the last drawn salary includes basic salary, dearness allowance, and commissions.

Also, See: Employee Appreciation

Get Started

Solving Real Business Challenges with a Robust & Impeccable System

Any Query? Reach Out To Us.

We are here to help you find a solution that suits your business need.

Watch a Demo

Get a visual representation of how we work!

Schedule Demo
Get in Touch

Our sales expert is just one call away to meet your needs.

Get In Touch
Start Chat

Have a question?
Chat with Us

Start Chat