For this, a Labor Commissioner of Kerala has passed an order regarding gratuity calculation . According to the order, this order can be heavy on the companies.

In fact, an old employee of private sector HDFC Bank had filed a petition before the controlling authority under the Payment of Gratuity Act, 1972. He worked in the bank for 16 years before leaving the job in 2022. However, questions started to arise on the gratuity paid by HDFC Bank to him. Which he challenged before the controlling authority.

According to PV Unnikrishnan Pillai, while filing the petition on June 8, 2022, he had said in his petition that the bank should have paid gratuity not only on basic pay but also by adding personal pay together. He presented his plea before the controlling authority to get the Payment of Gratuity Act 1972 properly implemented.

Company should pay interest along with basic pay

This argument of PV Unnikrishnan Pillai was accepted by the Controlling Authority and along with this a historic order was also passed. The authority said that HDFC Bank should pay him Rs 7.22 lakh along with 10% simple interest. This is in addition to the gratuity amount of Rs 5.95 lakhs already paid by the bank to the employee. Let us tell you, this order had come only in July 2022, but both the bank and the petitioner were informed about this order on 20 January 2023.

How is Gratuity calculated?

Last taken salary X years of service X 15/26 to calculate gratuity. Suppose if someone’s basic salary is 25 thousand rupees and he gets 15 thousand dearness allowance ie DA and 10 thousand rupees in other items. In this way the total salary becomes 50 thousand rupees. Now if that person has worked for 20 years and 10 months, then his total years will be considered as 21. Gratuity calculation on this will be done on the basis of 50 thousand X 21 X 15/26. In this way, the employee will get a total of Rs 6,05,769 as gratuity.

Who gets the benefit?

If an employee works in a company continuously for five years, then he becomes entitled to get gratuity. The amount that is made after adding the basic salary and dearness allowance of the last month of the job is given to that person.

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The amount received as gratuity is tax free and proves to be financially helpful to the employee. The amount you will get as gratuity is decided under a formula. The amount of gratuity is fixed on the basis of the salary of each person, the years of his service etc. If you too have been working in a company for 5 years or more, then here’s how you can calculate your gratuity amount.

Gratuity is decided by this formula

There is a fixed formula to decide the amount of gratuity. With this formula, you can also know how much gratuity you will get. The formula is – (last salary) x (number of years worked in the company) x (15/26). Last salary means the average of your last 10 months salary. Basic salary, dearness allowance and commission are included in this salary. Due to 4 days of Sunday in a month, 26 days are counted and gratuity is calculated on the basis of 15 days.

Suppose you earn 50 thousand

Suppose your last salary is 50 thousand rupees. In this case, the calculation will be based on this formula 50000x10x15/26. Based on this formula, you will get Rs 288461.54 as gratuity. On the other hand, if the average of your last salary is 50 thousand rupees and the duration of the job is 15 years, then according to the 50000x15x15/26 formula, you will get 432692.30 rupees. Although, if the company wishes, it can give more amount than the fixed amount as per its wish, but according to the rules, it should not exceed 20 lakhs.

In this case the calculation is done differently.

When the company or organization is not registered under the Gratuity Act, the employees are not covered under the Gratuity Act. In this case, it is the discretion of the company whether to give gratuity or not. But if the company still wants to give gratuity to an employee, then its formula is different. In this case, the amount of Gratuity will be equal to half a month’s salary for every year. But the number of working days in a month will be considered as 30 days, not 26.

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