Important ways for calculating the amount of gratuity are:
Ways
1. Rate of Gratuity:
The amount of gratuity payable to an employee shall be at the rate of fifteen days’ wages for each completed year of service or part thereof in excess of six months, based on the rate of the basic wages last drawn by the employee concerned.
In the case of monthly rated employee 15 days’ wages shall be calculated by dividing the monthly rate of wages last drawn (including D.A.) by 26 and multiplying the quotient by 15.
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2. Rate of Gratuity ‘ Piece-rate Employee:
If the employee is a piece-rated employee, daily wages shall be computed on the average of total wages received by him for a period of three months immediately preceding the termination of his employment and for this purpose, wages paid to him for any overtime work shall not be taken into account. [Proviso 1 to Sec. 4 (2)]
3. Rate of Gratuity for Employees in Seasonal Establishments:
In the case of employees employed in seasonal establishments, and who is not so employed throughout the year, the gratuity payable to him shall be at the rate of 7 days wages for each season.
4. Maximum Amount of Gratuity:
The amount of gratuity payable to an employee shall not exceed Rs. 3, 50,000.
5. Better Terms of Gratuity [Sec. 4 (5)]:
An employee may sometimes be entitled to receive better terms of gratuity under any award or agreement or contract with the employer. In such a case, nothing in Sec. 4 shall affect the right of the employee to receive better terms. [Sec. 4(5)]