Gratuity Amount
9 months ago
I worked in a company for 7 years, and my last day on the job was April 07, 2023. However, I only received Rs. 28,269 as my gratuity amount. My last drawn salary was Rs. 26,368, and my salary structure was as follows:
Basic Salary: Rs. 7,200.00
Profession Tax: Rs. 200.00
House Rent Allowance: Rs. 2,880.00
Income Tax: Rs. 0.00
Transport Allowance: Rs. 2,520.00
Reimbursements: Rs. 0.00
Arrears: Rs. 7,382.00
ESI: Rs. 150.00
Incentive bonus: Rs. 2,000.00
PF (Provident Fund): Rs. 864.00
Special Allowance: Rs. 5,400.00
Leaves Deductions: Rs. 0.00
Total Earnings: Rs. 27,328.00
Total Deductions: Rs. 1,014.00
Net Payment: Rs. 26,368.00
I believe that the gratuity amount I received is significantly lower than what I expected, and I would like to seek legal advice on this matter.
A.Dear Client,
The Payment of Gratuity Act, 1972 requires a minimum of five years of continuous service (as defined u/s.2A of the Act) under the same employer to make an employee or worker irrespective of status/nature of employment eligible to receive gratuity from the Employer. In your case, you join the company and in continuous service for 7 years. Accordingly, you are eligible for gratuity from the employer for putting in 7 years of continuous service in the Company. The Act provides for payment of gratuity at the rate of 15 days wage for each completed year of service subject to a maximum of Rs. 20 lahks. The component of Gratuity is only (Salary + DA( * 15/26* total number of services of the employee. In this case, the service years are not rounded off to the next number. So if you have a service of 7 years and 10 months, you will get a gratuity for 7 years and not for 8 years. Under Rule 7(1) of the Payment of Gratuity Rules, 1972, an employee who is eligible for payment of gratuity under the Act, or any person authorized, in writing, to act on his behalf, shall apply, within thirty days from the date the gratuity became payable, in Form 'I' to the employer who is duty bound to disburse the gratuity within 30 days of cessation of employment of employee or claim made by an employee. After the completion of 30 days, the employer has to pay you not only the gratuity amount but also the simple interest incurred on it. In case of an anomaly in computation in Gratuity, reach out to the office of the concerned Labour Commissioner who is the controlling authority under the Payment of Gratuity Act, 1972, for filing a complaint for anomaly in computation in Gratuity against the employer.
The Payment of Gratuity Act, 1972 requires a minimum of five years of continuous service (as defined u/s.2A of the Act) under the same employer to make an employee or worker irrespective of status/nature of employment eligible to receive gratuity from the Employer. In your case, you join the company and in continuous service for 7 years. Accordingly, you are eligible for gratuity from the employer for putting in 7 years of continuous service in the Company. The Act provides for payment of gratuity at the rate of 15 days wage for each completed year of service subject to a maximum of Rs. 20 lahks. The component of Gratuity is only (Salary + DA( * 15/26* total number of services of the employee. In this case, the service years are not rounded off to the next number. So if you have a service of 7 years and 10 months, you will get a gratuity for 7 years and not for 8 years. Under Rule 7(1) of the Payment of Gratuity Rules, 1972, an employee who is eligible for payment of gratuity under the Act, or any person authorized, in writing, to act on his behalf, shall apply, within thirty days from the date the gratuity became payable, in Form 'I' to the employer who is duty bound to disburse the gratuity within 30 days of cessation of employment of employee or claim made by an employee. After the completion of 30 days, the employer has to pay you not only the gratuity amount but also the simple interest incurred on it. In case of an anomaly in computation in Gratuity, reach out to the office of the concerned Labour Commissioner who is the controlling authority under the Payment of Gratuity Act, 1972, for filing a complaint for anomaly in computation in Gratuity against the employer.
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A.Dear client,
The amount of gratuity you receive depends on several factors, including your years of service and your last drawn salary.
In many countries, including India, the formula to calculate gratuity is as follows:
Gratuity = (Last Drawn Salary * 15/26) * (Number of Completed Years of Service)
Based on the information you provided, your last drawn salary was Rs. 26,368, and you worked for 7 years. Using the formula, the gratuity amount should be:
Gratuity = (26,368 * 15/26) * 7 = Rs. 2,04,120
However, you mentioned that you received only Rs. 28,269 as your gratuity amount, which is significantly lower than the expected amount.
In such cases, there could be several reasons for the discrepancy, including but not limited to:
Calculation Errors: There might have been errors in the calculation made by the company.
Eligibility Criteria: Some companies may have specific eligibility criteria for gratuity, such as completing a minimum number of years of service.
Exclusions: Some components of salary, such as incentives or allowances, may not be considered for gratuity calculations.
Company Policy: The company might have a different gratuity policy in place, which may result in a lower amount.
Legal Compliance: Companies are required to follow the relevant labor laws of the country, and if there are any violations, it may result in a lower gratuity amount.
To address this issue, you should take the following steps:
Review Company Policy: Review your company's gratuity policy to understand the terms and conditions for gratuity payouts.
Speak with HR: Contact your company's HR department to inquire about the details of your gratuity payment and seek clarification on the amount received.
Gather Evidence: Keep records of your salary details, years of service, and any communication with the company regarding your gratuity.
Legal Consultation: If the discrepancy is not resolved through internal channels, consider seeking legal advice from an employment lawyer. They can help you understand your rights and options and assist in resolving the matter.
The amount of gratuity you receive depends on several factors, including your years of service and your last drawn salary.
In many countries, including India, the formula to calculate gratuity is as follows:
Gratuity = (Last Drawn Salary * 15/26) * (Number of Completed Years of Service)
Based on the information you provided, your last drawn salary was Rs. 26,368, and you worked for 7 years. Using the formula, the gratuity amount should be:
Gratuity = (26,368 * 15/26) * 7 = Rs. 2,04,120
However, you mentioned that you received only Rs. 28,269 as your gratuity amount, which is significantly lower than the expected amount.
In such cases, there could be several reasons for the discrepancy, including but not limited to:
Calculation Errors: There might have been errors in the calculation made by the company.
Eligibility Criteria: Some companies may have specific eligibility criteria for gratuity, such as completing a minimum number of years of service.
Exclusions: Some components of salary, such as incentives or allowances, may not be considered for gratuity calculations.
Company Policy: The company might have a different gratuity policy in place, which may result in a lower amount.
Legal Compliance: Companies are required to follow the relevant labor laws of the country, and if there are any violations, it may result in a lower gratuity amount.
To address this issue, you should take the following steps:
Review Company Policy: Review your company's gratuity policy to understand the terms and conditions for gratuity payouts.
Speak with HR: Contact your company's HR department to inquire about the details of your gratuity payment and seek clarification on the amount received.
Gather Evidence: Keep records of your salary details, years of service, and any communication with the company regarding your gratuity.
Legal Consultation: If the discrepancy is not resolved through internal channels, consider seeking legal advice from an employment lawyer. They can help you understand your rights and options and assist in resolving the matter.
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