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End of Service Gratuity Formula:
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End of Service Gratuity is a financial benefit provided to employees upon termination of employment, calculated based on their basic salary and years of service. It serves as a form of severance pay for long-term service.
The calculator uses the gratuity formula:
Where:
Explanation: This formula calculates the end of service benefit by multiplying the basic salary by the years of service and applying the standard 21/30 gratuity factor.
Details: Accurate gratuity calculation is essential for ensuring fair compensation upon employment termination, helping both employers and employees understand their financial obligations and entitlements.
Tips: Enter basic salary in local currency and years of service as a decimal number (e.g., 5.5 years). All values must be valid (salary > 0, years > 0).
Q1: What is the 21/30 factor in the formula?
A: The 21/30 factor represents the standard gratuity calculation rate used in many employment contracts, equivalent to 21 days of pay for each year of service.
Q2: Is gratuity calculated on basic salary or total salary?
A: Gratuity is typically calculated on the basic salary component only, excluding allowances, bonuses, and other benefits.
Q3: How are partial years of service calculated?
A: Partial years are calculated proportionally. For example, 6 months of service would be calculated as 0.5 years in the formula.
Q4: Are there different gratuity calculation methods?
A: Yes, gratuity calculations may vary by country, company policy, and employment contract terms. This calculator uses a common standard formula.
Q5: When is gratuity typically paid?
A: Gratuity is usually paid upon termination of employment, whether due to resignation, retirement, or termination by the employer, subject to local labor laws.