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New Labor Code: Chances of getting gratuity only for one year’s job, not 5 years! Know the complete math of Gratuity

At present, gratuity is available to any employee who has worked in the job for about 5 consecutive years. After the implementation of the new labor code, gratuity can be available only for one year of service instead of five years.

New Delhi. The salaried people can be given big relief by the Modi government. Now the rule of gratuity can change for the employees. At present, an employee becomes entitled to gratuity only after 5 years of service. This is expected to change under the new labor code, in which employees will be eligible for gratuity payment even after completing 1 year of service. According to reports, from October 1, the Modi government at the Center can implement the rules of the Labor Code.




What is Gratuity

If an employee works for a long time in a company, then he gets gratuity in addition to salary, pension and PF. It is a reward given to an employee on behalf of the company. At present, an employee is entitled to receive gratuity if he has worked for at least 5 years. However, in case of death or disability of the employee, gratuity can be received even before 5 years.

How to Calculate Gratuity?

The amount of gratuity depends on two factors- first, how many years you have served in the company and secondly, your last salary. Gratuity is calculated on the basis of a fixed formula. Its formula is- Total Gratuity Amount = (Last Salary) x (15/26) x (How many years worked in the company).




Suppose an employee worked in the same company for 5 years. The final salary of that employee is Rs 20,000 (inclusive of basic salary and dearness allowance). Here only 26 days are counted in the 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. Thus, total gratuity amount of that employee = (20000) x (15/26) x (5) = 20000 x 2.88461538462 = Rs.57692

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 @ praveshmaurya24@gmail.com
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