Calculation of Gratuity for the Employees Who Are Not Covered under the Gratuity Act Even if the organisation is not part of the Act, they can pay gratuity. However, the calculation of gratuity is based on an individual’s half month’s salary for every year that has been completed. The salary includeThe following formula is considered for the
calculation of gratuity amount for employees who are not covered under the
Gratuity Act:


Gratuity Amount = (15 * Last drawn salary amount * period of service) / 30 

For Example: 

For example, if you have at a company for 10 years and 8 months and your salary is Rs.50,000, the calculation of the gratuity amount is done as follows: 

Gratuity Amount: (15 * 50,000 * 11) / 30 = Rs.2.75 lakh. 

The period of service of an employee is taken as
a whole year for the calculation. In case the number of months worked in the
last year is less than 6 months, the previous number of completed years is
considered. However, if the number of months completed in the last year of
service is more than 6 months, the year is considered to be a full year for
the purpose of calculation. Thus, the working tenure has been considered as
11 years. If the service period had been 10 years and 4 months (or anything
less than 6 months), the number of years of service would have been
considered as 10 years only.


As per the rules recorded on the pensioner’s portal of the government, the amount of gratuity at the time of retirement is calculated as follows: 

Gratuity Amount is equal to onefourth of the
lastdrawn basic salary of an employee for each completed sixmonth period.
The retirement gratuity amount which is payable is 16 times the basic salary.
However, it is subject to a cap of Rs.20 lakh.
