Tools
Gratuity provision on a fixed-term cohort
Takes headcount, monthly wage and length of service and returns the gratuity now accruing where it previously did not, so the figure can be put in a provision.
The figures
Result
About INR 1.38 crore, on the figures entered
Gratuity accrued across the cohort on one year of service, at INR 46,154 per person per year.
The arithmetic
- Eligibility: a fixed-term employee becomes eligible after one year of serviceEligible, at one completed yearCode on Social Security, 2020, section 53
- Years counted: a further period of more than six months may be counted as an additional yearone yearCode on Social Security, 2020, section 53
- Fifteen days' wages for each completed year: 15/26 x INR 80,000INR 46,154 per person per yearCode on Social Security, 2020, section 53
- x one year countedINR 46,154 per personCode on Social Security, 2020, section 53
- x 300 in the cohortINR 1,38,46,154, about INR 1.38 croreCode on Social Security, 2020, section 53
Assumptions
- Every person in the cohort is a fixed-term employee with the same length of service and the same monthly wage.
- Gratuity is fifteen days' wages for each completed year, calculated as 15/26 of the monthly wage, as in the note.
- A fixed-term employee becomes eligible after one year. A further period of more than six months but less than a year is counted as an additional year; the Code permits that rounding, and this tool applies it.
- The wage entered is the wage on which gratuity is calculated. The Code on Wages, 2019 limits excluded allowances to half of total remuneration, which may raise that base; this tool does not compute it.
- Rules made by a State may differ from the central position. The figure is a provision for the years entered, not a payment due on any date.
A figure returned here takes no account of the facts of any matter. It is information, not advice.