The gratuity is a lump sum amount that an employer gives to an employee after working for at least 5 years. This amount is usually paid when the employee leaves the company or retires, depending on the years of service.

However, in some cases, the company may decide not to pay a gratuity. It is a way for employers to thank employees for their loyal service. To receive this payment, an employee must complete at least 5 years in the company. Through this article, we will discuss how much gratuity you will receive if your basic salary is ₹50,000 and you have completed 6.5 years of service. We will explain the calculation method in simple terms to help you understand your gratuity amount easily.

Understanding Gratuity and Its Eligibility

A gratuity is a one-time lump sum payment made by the employer to an employee when they leave the company after completing at least 5 years of service. The Payment of Gratuity Act, 1972, ensures that employees receive gratuity, and in case of death, their family will receive the amount.

Eligibility for Gratuity

You are eligible for gratuity under the following conditions:

  • When you retire from your job.
  • If you leave the job after working for 5 continuous years with the same employer.
  • If you die or become disabled due to illness or accident while working.
  • If you are eligible for superannuation (retirement benefit).

Organizational Norms for Gratuity

Organizations that employ 10 or more people and follow the Payment of Gratuity Act, 1972, are required to pay gratuities to eligible employees.
How Are Service Years Counted?

To be eligible for gratuity, you must complete at least 5 years of uninterrupted service. However, once you have completed 6 months of service, it will be counted as a full year. The gratuity amount is calculated based on the number of years of service and the last drawn basic salary.

How Much Gratuity Will You Get If Your Salary Is ₹50,000?

To calculate gratuity, use the following formula:
Gratuity = (Last Salary × Number of Service Years × 15) / 26

15 represents the salary for 15 days for each year of service.
26 represents the number of working days in a month (excluding Sundays).
For example, if your salary is ₹50,000 and you have worked for 6.5 years, the gratuity will be:
₹50,000 × 6.5 × 15 ÷ 26 = ₹2,01,923.

This means you will receive ₹2,01,923 as a gratuity.