Gratuity calculation when restructuring salaries?


How gratuity is calculated when restructuring salaries in an appraisal?


Hi Prabha,
’ Gratuity ’ under the Payment of Gratuity Act,1972 is calculated at the time of termination of employment of the employee due to resignation, retirement on attaining the age of superannuation, death or disablement due to any accident on the basis of his last drawn salary comprising of the sum of basic and dearness allowance. and the number of years of continuous service in the establishment. Therefore, as it is, the restructuring of salaries in between has no impact on the gratuity payable other than for the purpose of annual contribution to the gratuity fund or insurance if any, which stands at 4.81% of the salary for the purpose of gratuity.