Gratuity: The Ultimate Guide To Working Professionals

Apr 7


Digital Amit

Digital Amit

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In this blog, we will tell you everything about gratuity, from the gratuity calculator to its benefits. Let’s dive in and start with the definition first.


Working individuals in India are offered a host of employee benefits. Gratuity is one of the most important and useful benefits of all. Even though it is a well-known term,Gratuity: The Ultimate Guide To Working Professionals Articles some people still do not have a clear understanding of this benefit. Are you one of them? If yes, you have come to the right place.

In this blog, we will tell you everything about gratuity, from the gratuity calculator to its benefits. Let’s dive in and start with the definition first.

A sum of money given to employees in return for their years of hard work and dedication is called gratuity. Employees wait for this payment throughout their employment period. Hence, every company should pay gratuity payments to their employees. 


Which Companies Are Bound To Give it?

Here are the top three important facts about gratuity every organization must know about:

  • The gratuity rules apply to every firm across India that has a strength of ten or more personnel. 
  • The Act applies in every part of India except one state, i.e. Jammu & Kashmir.
  • Once an organization comes under the purview of this Act, it continues being covered under the same, no matter if the headcount decrease below 10 in the long run.


Who gets The Benefit?

This is one of the common doubts among working professionals. First thing first, you must know that not every person working in an organization gets gratuity benefits. To acquire it, an employee is expected to be associated with a company for 5 years or more.

Additionally, some people even think that only employees working in the government sector get gratuity payments; however, it is not true. Employees working in both private as well as government sectors get this benefit. 


How to calculate it?

Now that you know the meaning and eligibility criteria of gratuity, you will be excited to calculate yours. Do not worry, we have got you covered.

Before telling you the formulae, we want to let you know that you can even use a gratuity calculator available on the internet. Such online calculators, undoubtedly, make the whole calculation process super easy as one just has to give some information and the accurate amount will be calculated in just a matter of seconds. 


Even if you are using a gratuity calculator, we want you to know the basic formulae to calculate gratuity manually: 


In the calculation, a working month is taken as twenty-six days. That means your 15-day salary will be calculated as (salary of a month x 15)/26. The result of this will be further multiplied by the total years of employment. The answer you will get by doing this will be your gratuity payable. Not to forget, when your basic salary increases, the gratuity payment will also change/increase. 


Forfeiture Rules

As per the act, this benefit can also be denied by employers. Take a look at some circumstances an employee will have to hear a NO for his or her gratuity payment: 



  • Partial Payment

If any damage or loss has happened to the employer or his/her property due to the employee’s carelessness during his or her employment period. In such cases, most employers deduct some amount from the total gratuity amount payable to the employee. Also, if the loss is acutely severe, then employers can even fully deprive the payment. 



  • Complete Payment

In the following two cases an employer can deprive the full amount of an employee’s gratuity payment:

  • If he or she leaves the company following any misbehavior or violent act 
  • If he or she was a part of an immortal act or offense that impacted the company reputation

That’s it.  We hope this blog helped you to get a clear picture of the gratuity benefit.

Do not hesitate to share these learnings with your colleagues and friends. Most importantly, be super confident the next time anyone asks you about anything related to gratuity.