what is rate of Gratuity
2 Replies
Ratan Deep Saxena
(Asstt Manager (Accounts & Finance))
(2998 Points)
Replied 19 February 2010
The quantum of Gratuity is payable @ 15 days wages based on the rate of wages last drawn by the employee concerned for every completed year of service or part thereof in excess of six months. Here term wages means basic wage plus dearness allowance.
So gratuity will be (Basic+DA) /26*15* No. of completed years of Service.
We divided the last drawn monthly wages by 26 to get the per day rate of wages. 26 figure comes from total days in a month minus weekly off(s) of month. It is a standard figure taken for calculating daily wage of an employee. In Uttar Pradesh it is clearly described on the G.O. of Minimum Wage that to get daily wage we should divide the monthly rate by 26.
It is clearly given in Payment of Gratuity Act, 1972 (see Section 4(2) explanation) that in case of monthly rated employee, the fifteen day's wages shall be calculated by dividing the monthly rate of wages last drawn by him by twently six and multiplying the quotient by fifteen.
This explanation is only for monthly rated employee.
regards,
ratan
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