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.
$276,923.08 in total: $276,923.08 of severance for 6 years, $0.00 in lieu of notice and $0.00 of gratuity.
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.
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 United States 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)
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
- Payment of Gratuity Act, 1972 (primary government)
Formula version 1.0.0 · definition 1.0.0 · United States · 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.