Gratuity Rule are set of rules defined by Central or State used during calculation of Gratuity Amount

In BizCentric HR, you can define different Gratuity Rules based on different Region.

To access the Gratuity Rule, go to:

> Home > Payroll > Gratuity Rule

1. Prerequisites

Before creating a Gratuity Rule, it is advised to create the following:

1. Employee
2. Salary Component

2. How to create Gratuity Rule

1. Got to Gratuity Rule > New
2. Select Applicable Components. These Salary Components contribute during Gratuity Calculation.
3. Select “Calculate Gratuity Amount based on”
4. Define Gratuity Rule
5. Save

3. Additional Properties

Some of the additional attributes used while gratuity Calculation are define below.

3.1 Work Experience Calculation method:

BizCentric HR provide two different method for calculation of Work experience.

1. Round off Work Experience method Round off your current experience. For example, if employee have total experience of 3 year and 6 month will be treated as 4 year experience.
2. Take Exact Completed Year.

3.2 Calculate Gratuity Amount Based On:

Let’s examine the calculation using the following example to grasp it better.

For the “Current slab” method: If the Gratuity Amount calculation is based on the Current Slab, the amount will be determined by multiplying the Work Experience (in years) by the Fraction of Applicable Earnings and then adding the total of the Applicable Earnings Components. For instance, considering the provided Gratuity Rules/slab, if an employee has 5 years of experience, falling into the third slab, the Gratuity Amount calculation will be:

Gratuity amount = 5 * 0.467 * (Arrear + Basic)

For the “Sum of all previous slabs” method: If the Gratuity Amount calculation follows the Sum of all previous slabs approach, the amount will be the sum of the products of individual slabs up to the year of experience, plus the summation of Applicable Earnings Components. For instance, based on the given Gratuity Rules/slab, if an employee has 5 years of experience, the Gratuity Amount calculation will be:

Gratuity amount = [(1 * 0) + (2 * 0.233) + (2 * 0.467)] * (Arrear + Basic)