Gratuity Calculator: If you are in a government job, then this news is very special for you. Now central employees can get gratuity amount up to Rs 25 lakh. But what will be the conditions for this? How is gratuity calculated? And which employees will benefit the most from this? We are going to give you complete details in this news, so that you can know how much gratuity you will get and what is necessary to get it. So let’s know.
What is Gratuity?
First of all, let us tell you what Gratuity is. Actually, Gratuity is a lump sum amount given to an employee when he leaves the job or retires. It can be said that this is a reward given to the employee by the company, which is given to him for long service. This amount is determined by the final salary of the employee and the number of years he has worked.
Let us tell you that the new gratuity limit was announced on May 30, 2024 in a circular issued by the Department of Pension & Pensioners Welfare under the Ministry of Personnel, Public Grievances and Pensions.
Gratuity Act
The Gratuity Act applies to various sectors including factories, mines, oil fields, plantations, ports, railways, motor transport undertakings, companies and shops with at least 10 employees. The Act entitles employees to receive gratuity payment equivalent to 15 days’ wages for every year till the completion of the job. For non-government workers, the limit is Rs 10 lakh. On the other hand, seasonal establishments calculate gratuity on the basis of seven days’ wages in every season. Seasonal establishments, also known as seasonal establishments, are businesses or industries that operate only during a particular period every year.
Last year, the gratuity limit for central government employees was raised from Rs 20 lakh to Rs 25 lakh. This hike was done after the 50% hike in the dearness allowance (DA) of employees which took the dearness allowance (DA) to 50% of their basic salary.
The Gratuity Act guarantees employees better gratuity terms in all agreements or contracts. For companies that come under the jurisdiction of the Central Government or operate in multiple states, the Centre acts as the governing body.
Who will get the benefit of gratuity (Gratuity Eligibility)
Under the Gratuity Act, companies are required to pay gratuity to retired employees or employees who leave the job after at least five years of service. The employee is entitled to receive gratuity in the following cases:
- On resignation after completing five years of continuous service
- On taking retirement as per company policy
Under certain circumstances, an employee can get gratuity even if he has worked for less than 5 years.
- In case of death of the employee, gratuity is given to the nominee or legal heir.
- If a person becomes disabled due to any accident or illness, even if he has not completed 5 years of service.
- If the workers working in underground mines work continuously for 4 years and 190 days.
- If employees working in other organisations work continuously for 4 years and 8 months i.e. 4 years and 240 days.
Gratuity calculation formula
A simple formula is used to calculate gratuity. You can know your gratuity amount by using the formula given below:
(Last Salary) x (Years of employment) x (15/26)
Salary components: Salary component includes basic salary, dearness allowance (DA) and commission.
Monthly work days: There are 26 working days in a month.
Method of calculation: 15 days average is determined based on half month’s salary.
How to claim gratuity?
To claim gratuity, a qualified employee has to submit an application in Form I to his company. If for any reason the employee is unable to do so, his nominee or legal heir is allowed to do so on his behalf.
On receiving the application, the company first verifies the claim, and then it has to immediately calculate the gratuity amount to be paid to the employee. This is necessary to ensure timely payment of gratuity and avoid any delay.
Resolution of Disputes:
If there is any disagreement regarding the gratuity amount or eligibility of an employee, then according to the Act, the matter can be raised before the governing body. For this, the employee has to file an application in Form N to the governing body of that specific region.
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