New Delhi. There is no confirmation from the government, but sources say that the central government is going to implement the new labor code from October 1, 2021. The biggest benefit to the employees will be that they will be entitled to gratuity only after 1 year of their service. At present it is mandatory for the employee to have at least 5 years of regular service for gratuity.
What is gratuity, do private employees also get it
In any private company, the employee has the right to receive salary, employer’s share in provident fund and pension scheme benefits. Similarly, when the employee has been given regular services for more than 5 years, then the employee also gets the right to receive gratuity. This amount is given to him free of cost at the time of retirement. The rules are relaxed in case of permanent disability or death.
How to Calculate Gratuity?
The amount of gratuity depends on two factors- first, how many years of service in the company and second, your last salary. Gratuity is calculated on the basis of a fixed formula. Its formula is- Total Gratuity Amount = (Last Salary) x (15/26) x (How many years worked in the company).
Suppose an employee worked in the same company for 5 years. The final salary of that employee is Rs 20,000 (inclusive of basic salary and dearness allowance). Here only 26 days are counted in the month, because it is believed that 4 days are holidays. At the same time, gratuity is calculated on the basis of 15 days in a year. Thus, total gratuity amount of that employee = (20000 salary) x (15/26) x (5 years) = Rs 57692
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