Gratuity Rules– Gratuity is the right of the employee. To get it, certain conditions have to be fulfilled. Some people believe that gratuity is received only when one works continuously for five years in a company. But, in reality, this is not the case at all.
Apart from salary and PF, companies and government departments also give gratuity to employees. Gratuity is a reward given to an employee by the company. To get gratuity, the employee has to fulfill certain conditions. A small part of the gratuity is deducted from the employee’s salary, but the major part is given by the company. An employee can get the benefit of gratuity even if he changes jobs, retires or leaves the job for any reason, provided he fulfills the conditions.
Many people believe that companies give gratuity only when a person works at the same place for 5 years or more. But, in reality it is not so. According to the law, working continuously for five years in the same company is not necessary to get gratuity. If the employee has worked continuously for 4 years and 240 days in the same institution, then he will be entitled to gratuity. Under the Payment of Gratuity Act, 1972, this benefit is available to every employee of a company where more than 10 people work.
There is no time limit on death
If an employee dies during his job, then there is no time limit for calculating his gratuity. This means that no matter how many days such an employee has spent in his service, he will be considered fully entitled to get gratuity. For those working in coal or other mines or in underground projects, a tenure of 5 years is considered only after completing 4 years and 190 days. According to the law, such employees working below the ground will be considered entitled to gratuity only after 4 years and 190 days.
This is how gratuity is calculated
The formula for calculating gratuity is. Total gratuity amount = (last salary) x (15/26) x (number of years worked in the company). Suppose an employee worked in the same company for 20 years. The last salary of that employee is Rs 50000. Here only 26 days are counted in a month because it is believed that there are 4 days of leave. At the same time, gratuity is calculated on the basis of 15 days in a year.
Total gratuity amount = (50000) x (15/26) x (20)= Rs 576,923.
