How is gratuity calculated?
Gratuity is your last drawn monthly wages divided by 26, multiplied by 15, multiplied by your years of service (section 53 of the Code on Social Security 2020). A part year counts as a full year only if it is more than six months. Someone who joined on 15 March 2019 and left on 30 October 2026 on wages of ₹40,000 has 7 years 7 months, which counts as 8 years, so the gratuity is ₹1,84,615, up to the ceiling the government notifies.
'Wages' here means basic pay, dearness allowance and retaining allowance. HRA, conveyance, overtime, commission, bonus and your employer's PF are left out. If the items left out come to more than half of your total pay, the excess is added back.
You qualify after five years of continuous service on retirement, resignation, death or disablement. Death, disablement and the end of a fixed-term contract waive the five years, and a fixed-term employee needs at least one year of service under the contract. Continuous service means 240 days in a 12-month year (section 54).
Apply in Form IV, ordinarily within 30 days of the gratuity becoming payable. The employer has 15 days from your application to send a notice fixing the payment date or giving reasons for rejection, and payment cannot fall later than the 30th day after it receives the application (Social Security (Central) Rules, 2026, rule 33). Final wages are due within two working days of your last day when you resign or are removed, dismissed or retrenched (Code on Wages, section 17(2)).
If this is where you are
I left my job and the employer has not paid my last salary, gratuity or other dues, and has not given my relieving letter.
Demand letter to a former employer for unpaid dues
A dated demand to HR with a copy to a director, a statement of dues and a sheet with the deadline and the rule for each item.
₹299₹499
Launch price until 30 November
Common questions
Is there a ceiling on gratuity?
Section 53(3) caps it at an amount the Central Government notifies. We found no notification fixing a figure under the 2020 Code, so we do not state one.
Does gratuity apply to every employer?
The Code covers every factory, mine, oilfield, plantation, port and railway company, and every shop or establishment with ten or more employees on any day of the preceding twelve months.
What if I applied late?
The Rules still take a late application for sufficient cause, so apply and say why it is late.
Can gratuity be forfeited?
Yes, wholly or partly, for riotous or disorderly conduct, violence or an offence involving moral turpitude in the course of employment (section 53(6)).
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