Question 1

How is gratuity calculated in India?

Accepted Answer

Gratuity = (last drawn wages × 15 × completed years of service) ÷ 26, payable after 5 years of continuous service for permanent employees, waived on death or disablement, and capped at ₹20,00,000. A remainder of 6 months or more rounds up to a completed year. Since 21 November 2025 the Code on Social Security, 2020 has replaced the Payment of Gratuity Act, 1972, though the formula is unchanged.

Question 2

What salary is gratuity calculated on in India?

Accepted Answer

Under the Code on Social Security it is “wages” — which starts at basic salary plus dearness allowance but is not capped there. Allowances excluded from wages may not exceed 50% of total remuneration, and any excess is added back, so where basic is a small share of CTC, which is common in India, your statutory base is higher than Basic + DA alone. This calculator uses the Basic + DA you enter, so treat its result as a floor.

Question 3

Do fixed-term employees in India get gratuity after 1 year?

Accepted Answer

Yes. Under the Code on Social Security, 2020, in force from 21 November 2025, fixed-term employees earn gratuity on a pro rata basis without serving 5 years, while permanent employees still need 5 years. The 1-year qualifying period comes from the draft central rules rather than the Code itself, and how “pro rata” interacts with the 6-month round-up is not yet settled. The provision applies prospectively, so service before that date may be treated differently.

Question 4

How is UAE gratuity calculated?

Accepted Answer

Under Federal Decree-Law 33 of 2021, gratuity accrues at 21 days of basic salary per year for the first 5 years and 30 days per year thereafter, payable after one year of continuous service. Resignation and termination attract the same entitlement, and a statutory ceiling of two years' wage may apply to very long service. This estimate does not apply that ceiling.

Question 5

Does resigning reduce gratuity in the UAE?

Accepted Answer

No. The reductions that applied to unlimited contracts were removed when the limited/unlimited distinction was abolished in February 2022. An employee who resigns receives the same 21/30-day entitlement as one whose contract is ended by the employer.

Gratuity & End-of-Service Calculator

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