Gratuity Rule: If you are an employee then this news is for you. People working in the private sector have many questions regarding gratuity. The biggest question among these is whether the gratuity money will not be received before the completion of five years? So let us know this news in detail below…
The government has indicated changes in gratuity in the new labor code, but at present nothing is completely clear. People working in the private sector have many questions regarding gratuity. The biggest question among these is whether the gratuity money will not be received before the completion of five years? We have brought answers to all such questions for you.
What is gratuity and who gets it?
First of all, let us know what is gratuity and is it available to all employees working in the private sector? Gratuity is given to the employees by the company. In a way, in return for continuous service, the company expresses gratitude to its employees in the form of gratuity. The Payment and Gratuity Act is applicable on all factories, mines, oil fields, ports and railways in the country. Along with this, employees working in shops of companies employing more than 10 people also get the benefit of gratuity.
What does the Gratuity Act say?
Employees who have worked continuously for five years in any company are considered eligible for gratuity. But in some cases, employees get the benefit of gratuity even with less than five years of service. ‘Continuous work’ has been clearly defined in Section 2A of the Gratuity Act. According to this, many employees can get the benefit of gratuity even if they have not worked for full 5 years.
Gratuity is available for less than five years-
According to Section 2A of the Gratuity Act, if employees working in underground mines work continuously for 4 years and 190 days with their employer, then they become eligible for gratuity. Whereas, employees working in other organizations are eligible for gratuity after working for 4 years 240 days (i.e. 4 years 8 months). Let us tell you that the notice period is counted in ‘continuous service’. Therefore, the notice period is also included in the gratuity.
How is the amount of gratuity calculated?
Total gratuity amount = (final salary) x (15/26) x (number of years worked in the company). Suppose you worked in the same company for 7 consecutive years. The final salary is Rs 35000 (including basic salary and dearness allowance). So according to the calculation (35000) x (15/26) x (7) = Rs 1,41,346. An employee can get a maximum gratuity of Rs 20 lakh.
