Basic about Payment of Gratuity Act, 1972

Payment of Gratuity Act, 1972

  1.   This Act may be called the Payment of Gratuity Act, 1972.

  2.   It extends to the whole of India

  3.   Formula for Gratuity Calculation:

(Last Withdrawal Salary) X (Year of Service) X (15 / 26)

  4.   Gratuity new limit :- 20 Lack  

  5.   Gratuity Eligibility – 5 Year of Services

  6.   Rule :- Gratuity is Mandatory

A] Gratuity percentage is not a part of CTC; it is part of Basic Salary.

B] Gratuity is 4.81% of Basic Salary.

C] Gratuity I mandatory in India for companies having ten or more employees in the twelve preceding month.

D] Following reasons will not disadvantage the employee and he will still be deemed to be in uninterrupted service description due to sickness, accident, allowed leave, lay off, strikes, lock out etc.

E] In case the employee is unable to complete the 5 year of service due to death or disablement, he will awarded gratuity as if he has originally completed five year of service, He will deemed to have completed five year if services for the purposed of thee act. But the amount of gratuity will be on the actual number of year completed and not on five years.

F] According to the payment of Gratuity Act, the employee should have at least 190 days of 365 days in case he working below the ground

G] 240 days out 365 days if he working above the ground.