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Salary & HRstatutory

Severance Pay Calculator

Severance, notice pay and statutory gratuity on separation. Severance weeks are a matter of policy or negotiation; gratuity in India is statutory and needs five completed years.

Also called: redundancy pay calculator, gratuity calculator.

₹
₹
Total on separation
₹2,76,923

₹2,76,923 in total: ₹2,76,923 of severance for 6 years, ₹0 in lieu of notice and ₹0 of gratuity.

Severance
₹2,76,923
Statutory gratuity
₹0
Pay in lieu of notice
₹0
Months of salary this represents
₹3
How this is calculated

Computed from the published rates for the tax year you selected, which is not necessarily the current year. A calculation, not tax advice, and it does not know anything about your circumstances beyond the figures entered.

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

Severance is normally quoted as a number of weeks per year of service, so it converts monthly salary to a weekly figure first. Indian gratuity is separate and statutory: fifteen days of last drawn pay for every completed year, computed on a twenty-six day month, and payable only after five years of continuous service. Service beyond six months in the final year rounds up, below six months it is dropped.

weekly pay = monthly * 12 / 52; severance = weekly pay * weeks per year * years; gratuity = 15 days of pay per completed year, on a 26-day month
S
Monthly salary (currency)
w
Severance weeks offered per year (weeks)
y
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.

six years at two weeks a year

Last drawn monthly salary
₹1,00,000
Completed years of service
6
Additional months in the final year
0
Severance weeks offered per year of service
2
Pay in lieu of notice
₹0
Include statutory gratuity (India)
No

Total on separation₹2,76,923

100000 * 12 / 52 = 23,076.92 a week, times 2 weeks times 6 years, worked by hand

Open this example

six years and seven months rounds up to seven

Last drawn monthly salary
₹1,00,000
Completed years of service
6
Additional months in the final year
7
Severance weeks offered per year of service
0
Pay in lieu of notice
₹0
Include statutory gratuity (India)
Yes

Total on separation₹4,03,846

100000 * 15 * 7 / 26; the final seven months rounds the service up

Open this example

gratuity needs five years

Last drawn monthly salary
₹1,00,000
Completed years of service
4
Additional months in the final year
0
Severance weeks offered per year of service
2
Pay in lieu of notice
₹0
Include statutory gratuity (India)
Yes

Total on separation₹1,84,615

boundary: four completed years earns no statutory gratuity

Open this example

Method and limits

What it assumes

  • Severance weeks are as offered. There is no federal severance entitlement in the United States.
  • Gratuity uses last drawn monthly salary, which for the statutory formula means basic plus dearness allowance.

What it deliberately does not model

  • Tax treatment differs sharply by country and by the reason for separation, and is not applied here.
  • The statutory gratuity ceiling is not applied. Enter the capped figure if your payout reaches it.
  • Some courts have read the five-year condition as four years and 240 days. This applies the plain statutory reading.

Sources

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

Frequently asked questions

Am I entitled to severance?
In the United States, generally not: severance is contractual rather than statutory. In India, retrenchment compensation and gratuity are statutory, and severance beyond that is negotiated.
Why does gratuity use a 26-day month?
The Act computes a day of pay by dividing monthly wages by twenty-six, treating four days a month as non-working. It makes a day of pay slightly larger than a thirtieth of the month.