A gratuity is an amount paid by an employer to his employee after completing five or more than five years of service. An employer can choose to pay with his profit or choose to invest in insurance schemes to save for his employee’s gratuity. In the case of insurance schemes, the employee too can make contributions.
You can use the Gratuity Calculation Formula to calculate your gratuity. The gratuity is divided into two parts – employees who are covered and employees who are not covered.
The formula for employees who are covered is (15 X monthly salary X working tenor) 26. The formula for employees who are not covered is (15 X monthly salary X working tenor) 30.
You can invest your gratuity amount in several schemes like a Fixed Deposit (FD) to avail substantial returns via which you can secure your retirement life.
To be eligible for gratuity, you should have served the same company for 5 years or more. Additionally, you are also eligible for gratuity if you are suffering from illness or disability due to an accident. In case of the demise of an employee, the gratuity amount will be paid to his legal heirs or appointed nominee.
You can apply for your gratuity by applying in favor of your employer within 30 days from the payable gratuity date.
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