Gratuity Update: If you do a job and are planning to leave the job, then this news can prove to be useful for you. In the coming days, companies may have to pay more money as gratuity to their employees.
For this, a Labor Commissioner of Kerala has passed an order regarding gratuity calculation . According to the order, this order can be heavy on the companies.
In fact, an old employee of private sector HDFC Bank had filed a petition before the controlling authority under the Payment of Gratuity Act, 1972. He worked in the bank for 16 years before leaving the job in 2022. However, questions started to arise on the gratuity paid by HDFC Bank to him. Which he challenged before the controlling authority.
According to PV Unnikrishnan Pillai, while filing the petition on June 8, 2022, he had said in his petition that the bank should have paid gratuity not only on basic pay but also by adding personal pay together. He presented his plea before the controlling authority to get the Payment of Gratuity Act 1972 properly implemented.
Company should pay interest along with basic pay
This argument of PV Unnikrishnan Pillai was accepted by the Controlling Authority and along with this a historic order was also passed. The authority said that HDFC Bank should pay him Rs 7.22 lakh along with 10% simple interest. This is in addition to the gratuity amount of Rs 5.95 lakhs already paid by the bank to the employee. Let us tell you, this order had come only in July 2022, but both the bank and the petitioner were informed about this order on 20 January 2023.
How is Gratuity calculated?
Last taken salary X years of service X 15/26 to calculate gratuity. Suppose if someone’s basic salary is 25 thousand rupees and he gets 15 thousand dearness allowance ie DA and 10 thousand rupees in other items. In this way the total salary becomes 50 thousand rupees. Now if that person has worked for 20 years and 10 months, then his total years will be considered as 21. Gratuity calculation on this will be done on the basis of 50 thousand X 21 X 15/26. In this way, the employee will get a total of Rs 6,05,769 as gratuity.
Who gets the benefit?
If an employee works in a company continuously for five years, then he becomes entitled to get gratuity. The amount that is made after adding the basic salary and dearness allowance of the last month of the job is given to that person.