What is gratuity bill and how this bill give benefits to employees. Actually, the new Labor Bill of the Central Government has got the approval of the House. After this approval, now the 5-year limit for taking gratuity is over. If you understand in easy language, the company will give gratuity in less than 5 years with conditions.
What is gratuity bill
Let me tell you here that the standing committee of Parliament had recommended to fix a period of 1 year for gratuity. According to the rule, till now, the employee was required to work for 5 consecutive years in any one company. This rule will also be applicable to the employees working on the contract.
When gratuity bill applicable for existing employees
Government will issue notification and detail information about the new rules of gratuity will be given in the government notification. Now this bill will be notified after the President’s approval. Actually, gratuity is given by the company as a reward to its employees. For this, it is necessary to be employed in the same company for 5 consecutive years. However, in case of death or disablement, it is not necessary to complete 5 years of the job to be given gratuity amount. The maximum limit of gratuity is 20 lakh rupees.
How Gratuity amount calculated
Total gratuity amount = (last salary) x (15/26) x (how many years worked in the company).
Example of gratuity calculation
Suppose X worked in the same company for 7 years. X last salary is 35000 rupees (including basic salary and dearness allowance). So the calculation would be something like this- (35000) x (15/26) x (7) = Rs. 1,41,346. This means that X will be paid Rs 1,41,346.
15/26 means in gratuity calculation
Actually, gratuity is calculated on the basis of 15 days in a year. At the same time, 26 days are counted in the month, because it is believed that 4 days is a holiday. One important thing about gratuity calculation is that if an employee works more than 6 months, then it will be calculated as one year. If an employee works for 7 years and 7 months, then he will be considered as 8 years and on this basis the amount of gratuity will be made. At the same time, if 7 years works for 3 months then it will be considered as 7 years only.