To calculate the gratuity amount for employees who are covered under the Act, the following formula can be used:
Gratuity= (n*b*15)/26
Here, ‘n’ is the number of years the employee has completed in the organisation, and ‘b’ is the employee’s last drawn salary, including dearness allowance and any commission on sales.
This gratuity formula is based on 15 days of the last drawn salary for each year of service completed (or part of it exceeding 6 months).
On the other hand, the formula to calculate the gratuity amount for employees who are not covered under the Act is as follows:
Gratuity= n*b*15/30
Here, the employee’s gratuity amount is calculated based on his/her basic salary for half a month. However, you must note that the number of years in this category is considered based on each completed year and is not rounded off.
