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End Of Service Gratuity Formula:
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End Of Service Gratuity is a lump sum payment made to employees upon termination of employment, typically calculated based on their final salary, years of service, and a predetermined factor that varies by country and employment regulations.
The calculator uses the standard gratuity formula:
Where:
Explanation: The formula multiplies the employee's last salary by their total years of service and a legal factor to determine the final gratuity amount.
Details: Accurate gratuity calculation is essential for ensuring fair compensation upon employment termination, complying with labor laws, and proper financial planning for both employers and employees.
Tips: Enter the last monthly salary in local currency, total years of service (including fractions for partial years), and the applicable factor based on your country's labor regulations. All values must be positive numbers.
Q1: What is the typical range for gratuity factors?
A: Factors typically range from 1/12 to 1/30 depending on the country and employment contract terms.
Q2: Are partial years of service included?
A: Yes, partial years are usually included and calculated proportionally based on the completed months of service.
Q3: What constitutes "last salary" for calculation?
A: Last salary typically includes basic salary and may include certain allowances, but this varies by jurisdiction and employment contract.
Q4: Are there maximum limits on gratuity payments?
A: Many countries impose maximum limits on gratuity amounts, either as a cap on calculable years or a maximum salary amount.
Q5: Is gratuity taxable?
A: Tax treatment of gratuity payments varies by country, with many offering partial or complete tax exemptions up to certain limits.