When people retire. And the money given to them every month after retirement is called pension. But the money that is received at once after leaving the job. It is called gratuity. Gratuity is not given to everyone. Some rules have been made for this, it is done according to that. Generally, gratuity is given to any employee after retirement. But according to the rules, gratuity can be given before retirement as well.

But for this, it is necessary to complete 5 years of job. For gratuity, the Payment of Gratuity Act was made in India in the year 1972. Its purpose was to provide financial benefits to those people. Who have worked in a company for a long time. Let us know who is given gratuity and what is the method of its calculation.

What is gratuity?

Gratuity is given by companies to their employees as a token of gratitude for their work. To get gratuity, any employee must work for 5 years in that company. Gratuity is given to both government and private employees. Gratuity and Payment Act applies to all companies, factories, mines, oil fields, ports, railways in India. Any company in which more than 10 employees work also allows gratuity to be given to its employees.

Who gets gratuity?

If any employee works in an institution for 5 years, then he becomes entitled to get gratuity. But in many places, gratuity is applicable even for less than 5 years. According to Section 2A of the Gratuity Act, if an employee works in an underground mine, then he can get gratuity after 4 years and 190 days.

But apart from this, in any other institute, company, gratuity is given only after 4 years 240 days i.e. 4 years 8 months. Please note that the benefit of gratuity can be availed only after retirement, you cannot avail it while working in the company.

How to know how much gratuity will be received?
How much gratuity will be received after retirement or after leaving the job can be easily known. For this, you can find out according to your basic salary and DA i.e. dearness allowance x (15/26) x (how many years worked). If we talk as an example, then your basic salary and DA i.e. dearness allowance together are ₹ 40000. You have worked in the company for 10 years. So you will get 40000 x (15/26) x 10 = 230,769 rupees as gratuity.

(PC: Freepik)