Gratuity Calculator: One of the biggest dilemmas people encounter when switching jobs is whether they’ll get gratuity. In the past, the five-year rule kept many employees from receiving benefits, but the new labor code has totally transformed the situation. Now, just one year of service qualifies you for gratuity. Let’s figure out how to calculate the gratuity you’ll earn based on your current salary.
The main perk of the new labor code is that you don’t have to wait ages to get your gratuity. You only need to work for a full year without interruption. If an employee takes a long leave, a break, or an unpaid leave, it could impact their gratuity. So, completing one year of continuous service is crucial.
How to calculate Gratuity?
The government has set a standard formula that all companies use: Last Basic Salary × (15/26) × Total Years. Here, 15 days represent your service value, and 26 is the average number of working days in a month. With this formula, any employee can quickly figure out their gratuity.
Let’s say an employee’s last basic salary was Rs 30,000 and they’ve been with the company for 1 year. Let’s plug those numbers into the formula:
Last Basic Salary: Rs 30,000
15/26 Value: 15 Days Service Value / 26 Working Days
Total years: 1 year
Now, the calculation looks like this:
30,000 × (15/26) × 1
This results in about Rs 17,300. So, even after just one year of work, the employee gets a nice sum as gratuity.
This also shows that the higher your salary, the more gratuity you’ll receive, and being eligible for gratuity within just 1 year under the new labor code is a huge relief for employees.
Benefits of Gratuity
Another key aspect of the new rules is that if an employee has worked for over six months, it counts as a full year. This means that even 11 months of service qualifies for gratuity. The best part is that this entire amount is tax-free. That’s why younger workers who often switch jobs and contracts are really benefiting from these changes.