5 Important FAQs Related to Gratuity

If you do not clearly understand gratuity, you are certainly in the right place now.

Here, we will tell you everything about gratuity, from the gratuity formula to the gratuity calculator.

Let’s dive in.

What is Gratuity?

Gratuity is one of the most important employee benefits in India. In simple words, gratuity means gratitude or thanks.

It is a favor from employers to employees for their services rendered to the company during their employment period.

The gratuity amount is received by employees after retirement, resignation, and death. Gratuity benefits employees in a host of ways.

How is it Calculated?

The calculation does not take into account various calculation parameters. The gratuity amount is decided based on eligibility criteria and the gratuity formula provided by the gratuity act 1972.

So, G = AS (B + DA) * ½ * TSY

Here,

• G stands for gratuity
• AS stands for the average salary
• B stands for basic
• TSY stands for total service years

What is the Eligibility?

Generally, gratuity is given to employees who have worked continuously for a minimum of 5 years in an organization.

Gratuity benefits are not available if the employee quits the job or dies while working in an organization.

Gratuity benefits are not available to daily wage employees, workers on a contract basis, and workers away from work for more than a month.

What is a Gratuity Calculator?

Gratuity calculators help you determine the gratuity amount in just a few seconds. All you need to do is fill in the asked details, and the calculator will give you the accurate result.

How to Apply for Gratuity?

Employees need a gratuity application form to apply for gratuity in India. The form is given by employers. The gratuity form should be signed by the employee and submitted to the company HR department.

There you go.

That’s all you need to know about gratuity.