Why divide by twenty-six?

The Act treats a month as twenty-six working days, so a day of pay is monthly salary over twenty-six. That makes the daily rate about fifteen percent higher than dividing by thirty would.

I am at four years and eleven months. Do I get anything?

On the plain reading of the Act, no. Some judgments have allowed four years and 240 days in the fifth year, so it is worth asking, but the statutory position is five completed years.

Salary & HRstatutoryIndia only

Gratuity Calculator

Gratuity under the Payment of Gratuity Act: fifteen days of pay per completed year on a twenty-six day month, after five years of service. The five-year condition is a cliff, and the final year rounds only at six months.

Also called: gratuity amount, gratuity formula.

Gratuity payable

₹2,42,308

₹2,42,308 for 7 completed years. Five years of continuous service is met, so gratuity is payable. The formula pays 105 days of salary in total, at a daily rate of ₹2,308.

Years counted

Before the ceiling

₹2,42,308

Daily rate used

₹2,308

Days of pay in total

105

Eligibility

Five years of continuous service is met, so gratuity is payable.

How this is calculated

An estimate, not an offer or a guarantee. Projected returns assume the rate you entered holds for the whole term, which no market does.

Method and background

This is what the calculation gives for the numbers you entered. It is an estimate, not advice, and it knows nothing about your situation beyond those numbers. Rules for India change on a published schedule; the effective date is shown on every rule-based tool.

How this is calculated

The formula divides monthly pay by twenty-six rather than thirty, on the basis that four days a month are non-working, which makes a day of pay noticeably larger than a thirtieth of the month. Eligibility is tested on service actually rendered: four years and eleven months earns nothing. Once eligible, service beyond six months in the final year rounds up to a whole year and below six months is dropped, so leaving two months later can be worth a full extra year of gratuity.

gratuity = 15 days of last drawn pay for each completed year, on a 26-day month

S: Last drawn monthly basic plus dearness allowance (currency)
n: Completed years of service (years)

Worked examples

Each of these is asserted on every build. If a change to the engine ever moved one of these answers, the build would fail before the page could print it.

seven years of service

Last drawn basic pay plus dearness allowance: ₹60,000
Completed years of service: 7
Additional months in the final year: 0
Statutory ceiling: ₹20,00,000

Gratuity payable₹2,42,308

60000 * 15 * 7 / 26, worked by hand

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seven months rounds the final year up

Last drawn basic pay plus dearness allowance: ₹60,000
Completed years of service: 6
Additional months in the final year: 7
Statutory ceiling: ₹20,00,000

Gratuity payable₹2,42,308

The two-month decision worth a whole year of entitlement

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four years and eleven months earns nothing

Last drawn basic pay plus dearness allowance: ₹60,000
Completed years of service: 4
Additional months in the final year: 11
Statutory ceiling: ₹20,00,000

Gratuity payable₹0

boundary: the five-year cliff, tested on actual service

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the ceiling caps a long career

Last drawn basic pay plus dearness allowance: ₹5,00,000
Completed years of service: 30
Additional months in the final year: 0
Statutory ceiling: ₹20,00,000

Gratuity payable₹20,00,000

boundary: the raw figure exceeds the statutory limit

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Method and limits

What it assumes

Salary means basic pay plus dearness allowance, which is the statutory definition rather than gross.
Continuous service with one employer.

What it deliberately does not model

Some courts have read the five-year condition as four years and 240 days. This applies the plain statutory reading rather than picking a side.
Establishments not covered by the Act may use a different formula, commonly dividing by thirty.
Tax exemption on gratuity has its own limit and is not applied here.

Sources

Payment of Gratuity Act, 1972 (primary government)

Formula version 1.0.0 · definition 1.0.0 · India · Report a problem with this calculator

Frequently asked questions

Why divide by twenty-six?: The Act treats a month as twenty-six working days, so a day of pay is monthly salary over twenty-six. That makes the daily rate about fifteen percent higher than dividing by thirty would.
I am at four years and eleven months. Do I get anything?: On the plain reading of the Act, no. Some judgments have allowed four years and 240 days in the fifth year, so it is worth asking, but the statutory position is five completed years.