What do we mean Gratuity? Who fulfills desirable conditions? How to Calculate it?

2. To have an understanding of Learners about:
 What the Gratuity is ?
 How one should fulfil desirable conditions directed towards
ensuring it ?
 How one should calculate the Amount of Gratuity ?

3. Gratuity is a collectable amount for an employee, paid as a
gratitude by the organization. It is also known as the end of
service benefits. An individual who has worked in an
organization for a minimum period of 5 years is eligible for
this benefit. Gratuity is calculated based on his/her average
salary, dearness allowance and number of years he/she
worked in the organization. This gratuity calculator helps the
common salaried people to calculate their gratuity amount.

4. Gratuity Calculation= [ (Basic Pay + D.A) x 15 days x No. of
years of service ] / 26 Where, D.A = Dearness Allowance.
End of Service Benefits Eligibility : 1. Any person employed on
wages/salary. 2. At the time of retirement or resignation or on
superannuation, an employee should have rendered
continuous service of not less than five years. 3. Payable
without completion of five years only when death and
disablement.

5. Example
 Calculate gratuity amount for a given Basic Pay = 17500,
DA = 1500 and Years of Service = 25
Solution :
= ( ( 17500 + 1500 ) * 15 * 25 ) / 26
= ( 19000 * 375 ) / 26
= 7125000 / 26
= 274038.461
Therefore, gratuity amount is 274038.461
