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Gratuity

Gratuity is a lump-sum payment an employer makes to an employee as a token of appreciation for long service, governed by the Payment of Gratuity Act, 1972. It is an employer cost, not a deduction from your salary.

Eligibility​

Gratuity is payable when you leave the company after at least 5 years of continuous service, for example on resignation, retirement, or the end of your engagement. (The 5-year requirement is waived if employment ends due to death or disablement.)

How Gratuity Is Calculated​

The statutory formula is:

Gratuity = (Last drawn Basic + DA) x 15 x years of service / 26

The 15/26 factor represents 15 days of wages for each completed year of service, based on a 26-day month. A part-year of more than six months is rounded up to a full year.

The total gratuity payout is capped at ₹20,00,000 (₹20 lakh).

Example: Last drawn Basic + DA of ₹50,000 with 6 years of service:

₹50,000 x 15 x 6 / 26 = ₹1,73,077

How Omnivoo Accounts for Gratuity​

Gratuity does not appear as a deduction on your payslip. Instead, Omnivoo treats it as an employer cost in two ways:

  • Monthly provision: Each month, Omnivoo sets aside a small gratuity provision (approximately 1.67% of your Basic + DA) as part of the employer's cost of employing you. This builds up the amount over time.
  • Payout at separation: If you leave after completing 5 years of service, the actual gratuity is calculated using the 15/26 formula above and paid out as part of your final settlement.

For more on the exit and settlement process, see the relevant final settlement guidance for employees.