Gratuity calculator: How much can you get on a Rs 1 Lakh Salary? Check eligibility, formula

Gratuity can add a substantial amount to an employee's retirement savings or financial cushion when they leave a job. The amount depends on the employee's last-drawn wages and length of service. For an employee whose last-drawn basic salary and dearness allowance (DA) total Rs 1 lakh a month, gratuity could exceed Rs 5 lakh after 10 years of service, subject to eligibility and the applicable calculation rules. Under the Code on Social Security, 2020, gratuity is payable when an employee retires, resigns or reaches superannuation. It is also payable in cases of death or disablement, subject to the applicable provisions. Who is eligible for gratuity? Regular employees need to complete five years of continuous service to qualify for gratuity. The five-year condition does not apply in cases of death or disablement. Fixed-term employees are covered by separate provisions that allow proportionate gratuity without the usual five-year requirement. What changed from 21 November 2025? The Code on Social Security, 2020, came into effect on 21 November 2025, along with the other three Labour Codes. Under Section 53, the expiry of a fixed-term employment contract is now explicitly recognised as an event that can trigger gratuity eligibility. Fixed-term employees are entitled to proportionate gratuity, with the Ministry of Labour and Employment clarifying in March 2026 that they qualify after completing one year of service from the commencement of their contract. How is gratuity calculated? For employees covered by the statutory formula, gratuity is calculated using the following formula: Gratuity = (Last Drawn Salary × 15 × Completed Years) ÷ 26 Where, Last Drawn Salary = Basic + Dearness Allowance (DA) 15 is the number of days' salary paid for each year of service. 26 is the number of working days in a month (excluding Sundays). Gratuity calculation on a Rs 1 lakh salary Consider an employee whose last-drawn basic salary and DA total Rs 1 lakh per month and who has completed 10 years of eligible service. The calculation would be: Gratuity = (Rs 1,00,000 × 15 × 10) ÷ 26 Gratuity payable = Rs 5,76,923 (approximately) This is an estimate based on the statutory formula. The actual amount depends on the employee's eligible wages, service period, and applicable rules. What happens if the employer delays gratuity payment? Employers are required to determine and pay gratuity within 30 days from the date it becomes payable. If payment is delayed, interest may also be payable for the period of delay. Employees who have not received their eligible gratuity can approach the appropriate Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.