An employee who has serviced the company continuously will receive a gratuity from the company as compensation. It's usually accepted that you can only receive a gratuity once five years have passed. The minimal gratuity is determined using a formula. However, if the company wants, it may also pay its employees more than specified in the formula. Government regulations prohibit giving an employee a gratuity of more than 20 lakh. However, many people in this circumstance wonder if they are eligible for a gratuity if their employment did not last the entire five years. Let's tell you the complete details.

What does the gratuity act say?

Even if you haven't accrued five years of service, you may be eligible for a gratuity under Section 2A of the Gratuity Act. According to Section 2A of the Gratuity Act, workers in underground mines who a company has employed for 4 years and 190 days are eligible for a gratuity. On the other hand, the personnel working in different institutions become entitled to a gratuity when they have worked for 4 years and 240 days or 4 years and 8 months. This time frame is a complete five years in such a scenario.

Notice period would also be calculated.

You must understand that this term includes your notice period as well. In other words, if an employee has worked for 4 years and 240 days with notice, he is still eligible for a tip. The amount of notice is included in the calculation of continuous service.

Gratuity is calculated with this formula.

The calculation for gratuity is (15/26) - (last pay) x (years working for the company) x (last salary). Your most recent wage is the mean of your last ten months' earnings. This remuneration includes the base pay, a dearness allowance, and a commission. Given that four Sundays in a month are not worked, 26 days are counted, and gratuity is computed using 15 days.