Skip to Content

Archived discussions are read-only. Learn more about SAP Q&A

Gratuity payment Accorind to the Law

Dear Experts,

Need your help to understand Gratuity Payment for Number of Years of Service.

If Employee works More than 6 months say 6.6 years system should consider it as 7 years and Paying the same.

At present System taking the exact Years if employee works below 6months for Exp : 6.5 years it is taking 6.5 years and Making the payment.

Now User came and said He wants to Round down the nearest value if employee works below 6 months. Ex : Emp worked for 6.5 years system should round down to 6 years and should make the payment itseems.

please let me know what is the Gratuity Payment as per Law. Should System round down the nearest Value or it has to pay exact num of years if employee works below 6 months.

Need Clarity. As it is a big burning issue and it involved for Auditing.

Need your Expert Advise on gratuity rules as per law.

Regards,

Sekhar

replied

Dear All,

Gratuity calculation = (Last drawn Basic Salary + Dearness allowance (if any)*15/26)* completed years

Completed years

  1. 1. Continues services more than 5 years in one employer (As per Gratuity act 1972)
  2. 2. If work more than 6 month treated as complete year (As per Gratuity act 1972)
  3. 3. If work less than 6 month treated as zero (As per Gratuity act 1972)

Example:-

Case1)

If employee has completed years = 5.6 years & his last drawn basic salary Rs. 20000/-

Gratuity calculation = (Last drawn Basic Salary + Dearness allowance (if any)*15/26)* completed years

Last drawn Basic Salary= Rs. 20000/-

Completed years= 5.6 = 6 Years

=(20000*15/26) * 6

Case2)

If employee has completed years = 5.5 years & his last drawn basic salary Rs. 20000/-

Gratuity calculation = (Last drawn Basic Salary + Dearness allowance (if any)*15/26)* completed years

Last drawn Basic Salary= Rs. 20000/-

Completed years= 5.5 = 5 Years

=(20000*15/26) * 5


For more information go through Gratuity Act 1972


Thank you!

0 View this answer in context

Helpful Answer

by
Not what you were looking for? View more on this topic or Ask a question