Thu. Jun 13th, 2024

As working individuals, it is our duty to have a clear knowledge of things related to our employment. Now, we all know that the Indian Government offers numerous benefits to the employees working in every sector. One such benefit is gratuity. Although it is one of the most important and long-awaited benefits by employees, many people do not even know its exact meaning. If you are one of them, this blog is just for you.

In this blog, we will tell you every vital information about gratuity that you should know about. So, let’s dive in.


It is an employee benefit that is given voluntarily or beyond the obligation. Companies give this benefit to employees as a tip for their hard work and dedication during their service period.


Every employee who fulfills the below-mentioned requirements is considered eligible for this benefit. The conditions are as follows:

  • S/he should have the eligibility for superannuation.
  • S/he must have retired
  • One of the major conditions is that an employee should work with an organization for five years or more.

These are the top 3 criteria to follow.

Also, there are some specific circumstances when employees can claim their gratuity before their retirement.  The situations are:

  • When the employee dies, the nominated person can request and take the amount.
  • When the employee becomes disabled followed by an accident or sickness, then s/he can take this benefit.


Before discussing the formulae, we will tell you the easiest way to calculate your gratuity. If you are in a hurry and do not have enough time, you can use a gratuity calculator to know the amount. There are several such calculators on the internet today, which makes this whole process easier and faster for companies and employees.

Now that you know about the gratuity calculator, it is time to know about the actual calculation:

So the formulae you should use is:

G =LDS*TEP*15 / 26

Here, LDS stands for last drawn salary which is a sum total of basic salary and dearness allowance

TEP stands for total employment/service period

The gratuity laws and regulations spell out that the amount of this benefit cannot be more than INR 20 lakh. Anything more than this amount will be considered as ex-gratia. In addition, if an employee has worked more than six months after the completion of the specified service period, it will be rounded to the nearest figure.

Also Read: 5+1 Questions About Gratuity Payment Answered

If you understood everything mentioned above, you will find no problem in calculating your total gratuity.

What About Contractual Employees?

It completely depends on the organization. If a firm considers temporary employees as employees, then they will be eligible for gratuity benefits.

When Should It Be Released?

The gratuity laws state that employers should release an employee’s gratuity amount within thirty days. On the contrary, he or she will have to pay interest for delayed days.

There are more facts related to this benefit but we have included only the vital ones here.

Hope this blog helped you!

By Neelima Bansal

Neelima Bansal is an experienced tech enthusiast, digital marketer, and blogger who is well known for his ability to predict market trends. Check out her blog at StoryBuzz. She also love to contributes her another tech new blog GuglY Tech

Leave a Reply

Your email address will not be published. Required fields are marked *