Any person working in a company, factory, Port, plantation, or any other establishment, where ten or more persons were employed on any day during the preceding twelve months, are entitled if they have rendered continuous services for a minimum of five years with the same employer

Following are the few instances when you will be eligible to receive gratuity.

1. An employee should be eligible for superannuation
2. An employee retires
3. An employee resigns after working for 5 years with a single employer
4. An employee passes away or suffers disability due to illness or accident

How to Calculate Gratuity?

Listed below are the components that go into the calculation of the gratuity amount. The amount is also dependent upon the number of years served in the company and the last drawn salary.

Gratuity = N*B*15/26

N = number of years of service in a company

B = last drawn basic salary plus DA

For example, if Rajesh has worked with a company for 20 years and had Rs.25,000 as his last drawn basic plus DA amount, then this will be..

Gratuity Amount for Rajesh = 20*25,000*15/26 = Rs.2,88,461.54

However, an employer can choose to pay more gratuity to an employee. Also, for the number of months in the last year of employment, anything above 6 months is rounded off to the next number while anything below 6 months in the last year of employment is rounded off to the previous lower number.