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Wednesday, 12 August 2020

How to Calculate Gratuity intresting calculation

Eligibility for gratuity requires 5 years of employment in one place

The Gratuity Payment Act was enacted in 1972 to guard the interests of employees

Delhi. The central government is considering a change within the rules of gratuity payment for workers.

Under this, the govt is considering reducing the amount of gratuity payment for workers from 5 years to 1 to three years.

Gratuity is that the amount paid to an employee on behalf of the organization or employer. except for this, he must work for a minimum of five years. Typically, this amount is paid when an employee leaves the work, is fired or retires.
Also, read 

1. Mukhyamantri Kisan Sahay yojana Gujarat-2020

Gratuity is received 5 years before the death of the worker
Apart from this, if an employee dies thanks to any reason or loses his job thanks to illness or accident, he or his nominee gets the quantity of gratuity. As per the principles of the Gratuity Payment Act 1972, the quantity of gratuity are often up to a maximum of Rs. 20 lakhs.

Gratuity Payment Act of 1972
The Gratuity Payment Act was enacted in 1972 to guard the interests of employees. Under the Act, employees are employed within the mining sector, factories, oil fields, forest areas, companies, and ports where all other sectors employ 10 or more employees. Gratuity and provident are completely different. the complete money in gratuity is paid by the employer, while within the provident fund a touch money is additionally taken from the worker .

Which organization comes under this Act?
Any organization where 10 or more employees work anybody day during the last 12 months is roofed under the Gratuity Payment Act. Once it comes under the Act, albeit the amount of employees within the company is a smaller amount than 10, it remains for this Act forever.

Employees under this Act are divided into 2 categories
Under the Gratuity Payment Act 1972, employees are divided into two categories to work out the formula for the quantity of gratuity to be received. the primary category includes employees who fall into the purview of the Act, while the second category includes employees outside the Act.

Employees working in both the private and government sectors are covered in these two categories. Under the second category, the employer (company or organization) which doesn't fall into the purview of the Gratuity Act can also grant gratuity benefits to its employees if it so desires.

How is gratuity calculated?Category 1- Employees who fall into the Gratuity Payment Act 1972.

Class 2 - Employees who don't fall into the Gratuity Payment Act 1972.
How is gratuity calculated?

The formula for calculating gratuity for category 1: (15 x previous salary x working period) / 26

Last Salary = Basic Salary + Inflation Allowance + Commission on Sales (if received). during this formula the worker is paid a mean of 15 days, counting 26 working days of the month.

Job Duration = within the last year of the work if he's employed above 6 months it'll be considered as a full year. for instance, after 5 years and seven months of service, it'll be considered as full 6 years.

Example- Mr. Sun leaves the work after working for five years and eight months during a Limited. During the last month of his retirement, his basic salary was Rs. 13000 per month. consistent with the formula, during this case, the quantity of his gratuity is going to be as follows.

How much gratuity are going to be given: 13,000x6x15 / 26 = Rs. 45,000

The formula for calculating gratuity for category 2: (15 x previous salary x working period) / 30

Last salary = basic salary + inflation allowance + commission on sale (if any). during this formula, an employee is paid a mean of 15 working days, counting 30 working days a month.

Job Duration = No but 12 months is added to the last year of employment for such employees. for instance, if an employee works for five years and seven months, it'll only count as 5 years.

Example- Mr. Moon quits his job after working in B Ltd. for five years and eight months. His basic salary during the last month of his retirement was Rs 13,000 per month. This company doesn't fall into the purview of the Act. In such a situation, consistent with the formula, Mr. that might be the quantity of Moon's gratuity.

How much gratuity are going to be given: 13000x5x15 / 30 = 32,500 rupees

Calculation just in case of death of the worker

In case of death of the worker, gratuity is paid counting on the duration of the work , up to a maximum of Rs 20 lakh.

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