Gratuity Calculator
Gratuity due on leaving a job, counted per completed year of service.
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Formula
How the calculation works
Gratuity is a lump sum paid on leaving a job, usually built from the monthly wage and the number of completed years of service. The common shape is one month's wage per completed year, so 25,000 a month over seven completed years gives 175,000. The wage used is normally basic pay plus dearness allowance only, because the other allowances are not part of the qualifying wage.
The word that carries the weight is completed. Seven years and six months counts as seven, not eight, because the eighth year was never finished. That is why the tool floors the years rather than rounding them: a fraction of a year, however large, is not a completed year, and the difference is a whole month's wage.
That flooring is deliberately conservative. Several jurisdictions do round up once six months have passed, so someone with seven years and six months may in fact be entitled to eight. The tool does not assume that, because the rule varies by country and by contract, and a figure that is too low is safer to check than one that is too high to rely on.
Common mistakes
- Entering total salary rather than basic pay plus dearness allowance, which inflates the gratuity well beyond what is due.
- Rounding seven years and six months up to eight when the tool counts completed years only.
- Treating the result as the statutory entitlement. The rounding rule and the wage definition are set by local law and the contract, and both vary.
When to use it
- Use it for a conservative estimate of gratuity on completed years, and as a cross-check against a settlement figure you have been given.
- Do not use it as the final word. The qualifying wage, the rounding rule and any service caps come from local law and your contract, and a real settlement should be checked against those.
Worked example
At 25,000 a month over 7 years 6 months, seven years count, giving 175,000.
Common questions
Do the extra six months count?
This counts completed years, so 7 years 6 months gives 7. Several jurisdictions round up past six months, but it varies by law; check your contract.
Basic pay or full salary?
Normally basic plus dearness allowance, excluding other allowances, so enter only those two.
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