What is Gratuity?
Gratuity is a monetary benefit given by an employer to an employee as a token of appreciation for long and continuous service. Under the Payment of Gratuity Act, 1972, it is mandatory for organizations with 10 or more employees to pay gratuity.
To be eligible for gratuity, you must have completed a minimum of 5 continuous years of service with the same employer.
How It Works
Your total gratuity payout depends on your last drawn salary (Basic Salary + Dearness Allowance) and the total number of years you have worked for the company.
Formula Verified
Official Calculation Formula
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Rounding off Years
When counting your years of service, any period exceeding 6 months is rounded up to the next full year. For example, if you have worked for 5 years and 7 months, your tenure is calculated as 6 years.