If you work for a long time in a company, then you get gratuity in addition to salary, pension and provident fund. It can be treated as a reward.
New Delhi. It is possible that the government may soon reduce the period of gratuity. Discussion is going on about this. The government is considering reducing the time of gratuity from 5 to 1 year. That is, if you work even for 1 year, then you will be entitled to gratuity. At present, for this you have to work in a company for 5 years. Not only this, the provision regarding transfer of gratuity on leaving the company like PF is also being discussed.
But what is Gratuity? If you work for a long time in a company, then you get gratuity in addition to salary, pension and provident fund. It can be treated as a reward. If the employee meets the standards set by the company for a long time, then he is given gratuity. Its formula is predetermined. One very important thing to note here is that a small part of gratuity is also deducted from your salary. At the same time, the company gives the rest of the share. That is, if you leave the company before the completion of gratuity, then you do not even get the money deducted from your salary.
Which companies have to pay gratuity?
The provision of gratuity has been made under the Payment of Gratuity Act 1972. According to this, gratuity will be given to the employees of every institution where more than 10 employees work. Even if the employee retires or leaves the company even after fulfilling the rules of gratuity, he will still get its benefit.
There is a fixed formula for how gratuity is calculated . Your last salary*(15/26)*(years of work in the company). If you have worked in any company for 10 years then your last salary is Rs 80000. So your gratuity will be calculated like this- 80000*(15/26)*(10). Your gratuity will be Rs 461538. Here 26 is the number of working days in a month. At the same time, gratuity is calculated on the basis of only 15 days of the year. The sum of basic salary and dearness allowance is counted in the final salary. Another important thing to note is that if a person has worked for 6 years and 7 months, then it will be considered as a complete seven years. That is, after working for more than 6 months after 5 years, it will be considered as a full year at the time of gratuity calculation.
