balaji ratnam   28 July 2024

# Indian gratuity act 1972 . what were the prevailing provisions in 1993?

I was paid a gratuity  which is much below the normal calculations. The formuls applied is 15/26* (my basic pension only)  16 1/2 years sevice instead of 26 1/2 service I had put in  at the time of taking VRS in mid 1993. This came to 36,000? aprrox. Was the calculation correct?

1. The amount of gratuity for employees whose employer is covered under the Gratuity Act can be calculated using the formula:

Gratuity = n*b*15 / 26

Where n = Tenure of service completed in the company
b = Last drawn basic salary + dearness allowance

For example, you have worked with the XYZ company for a period of 15 years. Your last drawn basic salary along with dearness allowance was Rs 30,000. Hence:

The amount of gratuity = 15 * 30,000 * 15 / 26 = Rs 2,59,615

Two points must be noted here:

As per the Gratuity Act, the amount of gratuity cannot be more than Rs 20 lakh. Any excesses would be treated as ex-gratia.

If the number of years you have worked in the last year of employment is more than six months, then it will be rounded to the nearest figure. Suppose your tenure of service is 16 years 7 months, then you receive the gratuity for 17 years. Otherwise, its for 16 years if it happens to be 16 years 4 months.

1. For employees whose employer is not covered under the Gratuity Act, the gratuity amount would be calculated as per the half-month salary on each completed year of service.

You can now calculate your gratuity amount yourself and take it up legally if there is any discrimination for recovery in case amount paid is lesser that that is due to you.

Dr. J C Vashista (Advocate )     29 July 2024

Why do you need to calculate rate of gratuity applicable a decade before now since even if you were paid less than entitlement, can you claim now ?

balaji ratnam   29 July 2024

I agree that the claim is after nearly 30 years. Among my old papers I noticed only recently. But my Ex employer ( SBI) would not refuse  using limitation clause. I have put my claim, let us see. Can you help draft a legally worded letter? I am a super senior citizen. My claim is just.I am ready to pay reasonable amount for your time and effort. Balaji Ratnam