How Gratuity Calculator Works
Gratuity is a benefit paid by the employer to an employee for long service. The formula used is: Gratuity = (Last drawn salary x 15 x Years of service) / 26 for employees covered under the Payment of Gratuity Act, 1972. The number 15 represents 15 days of salary for each year of service, and 26 represents the working days in a month.
For employees not covered under the Act, the divisor changes to 30 (calendar days). The "last drawn salary" includes basic pay and dearness allowance (DA) only. Other components like HRA, conveyance, and special allowances are not included.
Years of service are rounded to the nearest whole number. If you have worked 4 years and 7 months, it counts as 5 years. But 4 years and 5 months counts as 4 years (since the months are less than 6). You need at least 5 years of service to be eligible for gratuity.