Gratuity Calculator (Code on Social Security, 2020)
Estimate gratuity under section 53 of the Code on Social Security, 2020, using monthly wages under section 2(88), service length and the selected service category.
Gratuity Specifications
Enter the employee's wage figure under section 2(88). This tool does not derive it from basic pay or CTC.
The fixed-term option is for an employee engaged directly by the employer, not a contractor's staff.
Service condition met for this category. 6 year(s) are counted in the estimate; a remaining period must exceed six months to add a year.
This estimate assumes Chapter V applies to the establishment and employee. Coverage commonly includes factories and specified industries, and shops or establishments with 10 or more employees during the preceding 12 months. Confirm your establishment's status and any better contractual terms.
₹1,38,462
Service condition met for selected categoryEstimate only. Confirm coverage, continuous-service records, applicable wage components, current notifications and any better award, agreement or contract terms.
Gratuity formula and eligibility
For a monthly-rated employee, section 53 uses monthly wages under section 2(88) × 15/26 × counted service years. A completed year counts, and a remaining period must exceed six months to add another year. This estimate does not calculate the section 2(88) wage figure for you.
- The general qualifying period for regular service is five years of continuous service.
- A directly engaged fixed-term employee qualifies after one year under the contract, according to the Ministry of Labour FAQ.
- The five-year condition does not apply when employment ends because of death or disablement. Contract labour engaged through a contractor is not fixed-term employment merely because the contract has an end date.
The Ministry FAQ states a current statutory maximum of ₹20 lakh. Income-tax exemption is a separate question and depends on the applicable tax rules and employee category. Check establishment coverage, service records, later notifications and any better terms in an award, agreement or contract before settlement.
Code on Social Security, 2020 · Ministry of Labour FAQs (16 March 2026)
Frequently asked questions
How is gratuity calculated?
For a monthly-rated employee, the estimate is monthly wages under section 2(88) × 15/26 × counted service years. A completed year counts, and a remaining period must exceed six months to add another year. Confirm the wage components and establishment coverage before relying on a settlement figure.
How long must an employee serve to qualify?
The general qualifying period is 5 years of continuous service. A directly engaged fixed-term employee qualifies after one year under the contract, according to the Ministry of Labour FAQ. The five-year condition does not apply when employment ends because of death or disablement. Different categories can have separate rules.
Is there a maximum gratuity amount?
The Ministry of Labour's Labour Codes FAQ states that the current statutory maximum is ₹20,00,000. Tax exemption is a separate question governed by the applicable income-tax rules and employee category.
Did the Labour Codes change gratuity?
The Code on Social Security, 2020 took effect on 21 November 2025. It applies the Code's wage definition to gratuity from that date and provides for fixed-term employees, while the 15/26 calculation for monthly-rated employees remains in the Code. Check current Central or State rules for your establishment.