Gratuity Calculation: How Much Will You Get After 10, 20 or 30 Years?

Gratuity is a statutory benefit paid to eligible employees for their service to an organisation.

Under the current labour framework, gratuity rules are governed by the Code on Social Security, 2020.

For regular employees, gratuity generally requires 5 years of continuous service, subject to specified exceptions.

The 5-year condition is not required in cases such as death or disablement.

Fixed-term employees can qualify for gratuity after completing one year of service under the contract.

Gratuity is generally calculated at 15 days’ wages for every completed year of service.

For eligible employees, the common formula is: Last drawn wages × Completed years × 15/26.

The calculation uses the employee’s last drawn applicable wages, not simply the total monthly CTC.

10 years + ₹50,000 salary: ₹50,000 × 10 × 15/26 = ₹2,88,462 approx.

20 years + ₹60,000 salary: ₹60,000 × 20 × 15/26 = ₹6,92,308 approx.

30 years + ₹70,000 salary: ₹70,000 × 30 × 15/26 = ₹12,11,538 approx.

If service includes a period exceeding six months, it is generally counted as an additional year for gratuity calculation.

The current statutory maximum gratuity notified by the Central Government is ₹20 lakh.

However, an employee may receive a higher amount if better gratuity terms are provided under an agreement, award or contract.

Remember: Your actual gratuity depends on applicable wages, completed service and the terms governing your employment.

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