Hr Executive
Client Relations Manager
Pers. & Admn.
+10 Others

Hi! All,
Can you help me in calculating the Gratuity amount payable .. under the following conditions mentioned AS BELOW
If Basic Salary:12000...
If total years with the company:11yrs & 9 months
If gratuity is pending for ...........1 year
If Gratuity is maintained through LIC
what willl be the Sum of gratuity that will be payable .:?:
Will there be any iNTREST component payable to the employeee :?
If yes who will bE payin the same...Co or LIC :unsure:
29th September 2008 From India , Pune
Hi, Priyalakhsmi has given the righ formula. You can round off the number of years to 12 years and calculate. Regards
5th October 2008 From India , Gurgaon
such as senorita i also want detailed information on this formula. wht does 15 and 26 stands for:confused:
6th October 2008 From India , Pune
Dear All,
Let me explain what is 15 and 26. 15 implies that 15 days salary for every completed year of service. 26 implies that no of days in a month to calculated the daily average salary.
6th October 2008 From India , Madras
Dear All,

If gratuity is maintained by LIC, gratuity amount payable for the employee whose salary is Rs.12000/- with 11.9 months service is as follows:
12000/- x 12 x 15
----------------- = Rs.83077/-
No. interest will be payble to the employee from LIC for delayed process.

Thanks & Regards,
Manager (HR)
KAR Group

Please find below some formats of termination letter:


From our records, we find you have attained age of superannuation, i.e 60 years in………………………….Itself. While we do recognize your valuable service, it is our company’s policy to retire people at the age of 60 years.. Of course we relaxed this rule by two years for you as a special case.

Now in continuation for our company’s policy we wish to offer you retirement with effect from ………………………. You will be relieved from our service after the close of office hours on………………..

Wishing you a very peaceful and healthy life after retirement.



We regret to inform that despite of our repeated warning in recent times, you are not able to measure up to our expectations in your performance.

Production being the most vital functional area, there is no room for complacency and hence we have decided to terminate your service with immediate effect.

You are requested to approach Personal department for settlement as per company’s rule.



Of late, it has come to management’s notice that you are frequently absenting yourself from the work.

Hence we have decided to terminate your service with effect from …………………..

You are requested to approach Personnel department for settlement as per company’s rules


Thanks & Regards,
Manager (HR)
KAR Group,

6th October 2008 From India , Madras
Regarding Calculation of Gratuity
15 days x 12000 x 12 yrs =83076.92
The Gratuity Calculation is Rs. 83076.92
11 yrs and 9 month will be considered as 12 yrs.
The Application for Gratuity to be filled in Form 1, hence no penalty will attract the delay payment, legally,
V K Sharma
6th October 2008 From India , Vasai
Payment of Gratuity Act, 1972

Object: It is an Act to provide for a scheme for the payment of gratuity to employees engaged in factories, mines, oilfields, plantations, ports, railway companies, and shops or other establishments.

Applicability: Any Employer of the above noted establishments where 10 or more persons are employed or were employed on any day of the preceding 12 months is liable to pay gratuity to its employees. Once the Act becomes applicable, it continues even if the number of employees falls below ten.

Entitlement: Gratuity is payable to an employee (nominee - in case of death of employee) who has rendered continuous service of five years or more on his termination of employment, superannuation, retirement or resignation. Completion of continuous service of five years is not necessary where the termination of employment is due to death of disablement.

Calculation: W x Y x 15/26 where W = Last Wage drawn i.e., basic + DA
Y = number of completed years of conyinuous service (six months or less to be ignored and more than six months to be counted as full year.
15 = 15 days salary
26 = No. of working days in a month.

Maximum Limit: Rs.3.5 lacs. (w.e.f 24-09-1997)

Time Limit for application to employer: Employee has to make an application in Form-I to his employer within 30 days from the date of gratuity becomes payable.

Whom to apply in case of non-payment by employer or dispute: Application in Form-N is to be made to the "Controlling Authority" i.e., the Assistant Labour Commissioner or the Labour-cum-Conciliation Officer of the concerned area within 90 days on the expiry of 30 days period of the employer.

Appeal: An aggrieved party can file an appeal to the Appellate Authority i.e Additional Labour Commissioner within 60 days of the decision of the Controlling Authority.
you know gratuity due after 5 year of regular service under one employer.

formula is Present basic divided by 26 ( days of month calculated as 26)

then multiply by 15 of every year . 15days salary eligible for every year after 5 year of regular service under one employer
You can use folloing formula for G. Caculation

Last month basic x 15 x No.of Years of Service Completed
Its very simple. Its just like rounding of Paise to nearest Rupees. e.g. Rs. 5.60 would be rounded off to Rs. 6/- where as Rs. 5.40 would be rounded off to Rs. 5/-. Similarly if months are more than 6 then it would rounded off to higher side i.e. in Years 1 would be added e.g. 5 years 5 months would be rounded off to 5 years where as 5 years 8 months would be rounded off to 6 years.

it is (Basic Pay+DA) X 15/26 X No. of years of Services(runding off).

8th October 2008 From India , Madras
Hi, Can any one breif me on gratuity payment workings for the employees worked more than 10 years with the organisation. Regards, Preeti
10th October 2008 From India , Mumbai
LIC must have given you a master policy and a format for submitting gratuity claims. Generally companies do prefer to put all the claims on monthly basis.
You have to submit the details as required in format given by lic and they will process the claim and give the cheque in favour of your company in turn you will have to pay the same to the concerned ex-employee.
No. interest is paid.
Calculation 12000/26X15 = 6923 x 12 yrs. = 83076
11th October 2008 From India , Pune
In those 12 years of service, what happens my BASIC was changing every year? Do you apply that formula for each year.
14th October 2008 From India , Selam
Formula to Calculate Gratuity
Basic Salary*15*No. Of Years/26
15- As per act we have to pay 15 days salary for each completed
year to eligible employees
No. of years- 6month or above treat as 1 year for eg 7 year 7 month will
be treated as 8 years.
26 - Avg. working days in a month
For any clarification plz contact-
14th October 2008 From India , Delhi
Dear Vishal,
This is Bharti working in Kindergarten school. i was appointed on 4/07/1988 i resigned from my job on 18/06/2008 with my 3 months notice which completed on 17/09/08. i waited for my gratuity till dated but my management refused to pay saying if i resigned from my job i resigned from my incentives. i resigned along with 3 collegues of mine all of us working for kindergaten pvt section. amongst us only 1 got gratuity on humanitarian grounds.. our school collect funds Rs. 1000/- from new admissions in kindergarten towards teachers gratuity fund. for which the recipt is issued to each child seeking admission. (i dont have recipt since im not in school any more) but school will have the duplicate for sure. 2 others are not getting gratuity saying they'e not completed 10 yrs of service. (completed 8Yrs). for me theres no excuse not to give but.. now only reason they give is that they dont want to give gratuity as theres is a pvt institute... can you explain how do i get my gratuity... more over if u could pl. reply on i'll be obliged as after posting here i cant find my own post since im new to this forum.. i'll be obliged .. pl. help me...
15th February 2009 From India , Mumbai
Interest payment on delayed Gratuity was not mentioned in the above content.

The interest Rate to be applied on delayed payment of gratuity is 10%.

Employees who do not receive their gratuity within 30 days (from the date on which it becomes payable) are entitled to get the money along with simple interest from the due date to the date of actual payment, the Madras High Court Bench here has said.

Dismissing a writ petition filed by Arumuganeri Salt Workers' Cooperative Production and Sale Society in Tuticorin district, Justice K. Chandru said that the 30-day time frame would begin from the due date and not from the date of a positive order passed by the controlling authority under the Payment of Gratuity Act. The judge directed the petitioner society to pay interest at the rate of 10 per cent to one of its former employees who had resigned his job in June, 2003, without driving him further to any other forum. He held that that the appellate authority under the Act had rightly ordered payment of interest from 2003. Initially, A. Rajan, who was employed in the society on a daily-wage basis for six years, had filed an application before the controlling authority.

It was allowed with a direction to the society to pay the gratuity amount of Rs.9,692 within 30 days failing which it must be paid along with interest. Subsequently, the employee filed an appeal claiming that he was paid only the gratuity amount.

Allowing his appeal, the Appellate authority ordered to pay interest at the rate of 10 per cent from the date on which the gratuity became due till the date on which it was paid. The society had filed the present writ petition contending that it paid the amount within 30 days of the order passed by the controlling authority and hence it was not obliged to pay interest. “

Source: 17th Sep 2010 – The Hindu
23rd September 2010
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