Tuesday, March 30, 2010

Gratuity Payment & Rakesh

One fine morning Rk (one of our Employees) asked me ” Sir, what is gratuity & am I eligible for the same “। I knew his intention ad asked some time to give complete and factual answer & he agreed। I recalled my books in Labour laws and summarized him in this way & I am sure the summerization will clear the basic doubts & ambiguity about gratuity।

Gratuity is a retiral benefit only which is applicable to all those establishments which are registered under the factories Act & the shops & establishment Act।But this is optional for certain establishments.

  • Employees can claim the gratuity payment or the Employer can give the gratuity to the Employees only if the employee has completed at least complete 5 years of continuous service.
  • Gratuity is calculated on the last month’s basic+DA and the gratuity calculation is as under
    Gratuity Payment = Last Salary drawn * Number of years completed * 15/26
  • Last drawn Salary = Basic+DA
  • Number of Years completed = ignore below 6 months & count a full year if more that 6 months
  • 15/26 = 15 days salary per 26 working days
  • Maximum gratuity payable to any employee is 3,50,000
    But folks please take a note that any break during the service will not fetch you gratuity. Transfers are allowed under the same employer nut not the rejoining cases.

    With this i have roughly covered all possible general information about gratuity for a Lehman & hope things are pretty clear.



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