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Gratuity Calculation: Big News! 1 month haste in changing jobs will cause big loss, understand the calculation of gratuity, know how

Gratuity Calculation: Gratuity is a reward received by an employee from the company. If the employee fulfills the conditions of the job, then gratuity will be guaranteed to him according to a fixed formula.

Gratuity Calculation: If you do it in a company in the private sector, then you must have known about gratuity. If you work for a long time in any company, then you are entitled to gratuity. Most of the people when they change jobs, they expect gratuity from the company. But, haste in changing jobs can also cause damage at times. Therefore, if you have spent 5 years or more in any company and are planning to change jobs, then gratuity calculation should also be done. This is because even one month’s haste can do you a big loss. Some rules have been set by the government to get gratuity. If you fulfill it, then only you will get the benefit of gratuity. Let’s understand the calculation…

What is Gratuity?

Employees who work for a long time in any company get gratuity in addition to salary, pension and Provident Fund (PF). Actually, gratuity is a reward received by an employee from the company. If the employee fulfills certain conditions of the job, then gratuity will be paid to him on a guaranteed basis under a prescribed formula.

When do you get Gratuity?

An amount of gratuity is deducted every month from the salary of the employee. But a large part of it is given by the company. According to the current rule, if a person works in a company for at least 5 years, then he becomes entitled to gratuity. That is, if you leave the company after 5 years, you will get gratuity.

According to the formula, when calculating the year for gratuity, then the period of more than six months is considered as 1 year. For example, if an employee works for 10 years 8 months, then he will be considered as 11 years and on this basis the amount of gratuity will be made. At the same time, if 10 years works for 3 months, then it will be considered as 10 years only.

How is the amount calculated?

There is a fixed formula to calculate gratuity. Total Gratuity Amount = (Last Salary) x (How many years worked in the company) x (15/26). Now suppose an employee worked in the same company for 10 years. If the final salary of that employee is Rs 50,000 (inclusive of basic salary and dearness allowance), then he will get about Rs 2.88 lakh as gratuity (50000) x (10) x (15/26) = Rs 2,88,461). In the formula of gratuity calculation, only 26 days are counted in every month, because it is believed that 4 days are holidays. At the same time, gratuity is calculated on the basis of 15 days in a year.

How will there be a loss in changing jobs in a hurry of 1 month?

Suppose you have worked in a company for 10 years and 5 months, and you are changing jobs. Your lost salary including dearness allowance is Rs 50,000. Now according to the gratuity formula, you will get a gratuity of Rs 2.88 lakh. Now if you change this job after 10 years and 7 months, then your gratuity amount will be Rs 3.17 lakh.

This is because during the calculation of the year in gratuity, if the duration of the job is more than 6 months during that year, then it is considered as a complete year. That is, in the haste of just one month, you have lost about 28 thousand rupees. Therefore, if you are staying with a company for a long time and are thinking of changing jobs, then you should definitely think about this one month calculation in gratuity.

Parvesh Maurya
Parvesh Maurya
Parvesh Maurya, has 5 years of experience in writing Finance Content, Entertainment news, Cricket and more. He has done BA in English. He loves to Play Sports and read books in free time. In case of any complain or feedback, please contact me @
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