This Feature is introduced in Version 13, which will be part of a separate Payroll Module.

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

In TechoERP, you can define different Gratuity Rules based on different Regions.

To access the Gratuity Rule, go to:

Home > Payroll > Gratuity Rule

1. Prerequisites

Before creating an 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:

TechoERP provides two different methods for the calculation of Work experience.

1. Round off Work Experience method Round off your current experience. For example, if an employee has a total experience of 3 years and 6 months will be treated as 4 years of experience.
2. Take Exact Completed Year.

3.2 Calculate Gratuity Amount Based On:

Let's consider the following example to understand the calculation.

1. Current slab: If Gratuity Amount calculation is based on Current Slab, then amount will be the product of Work Experience (in years), Fraction of Applicable Earnings and summation of the Applicable Earnings Components. Based on above Gratuity Rules/slab, if an employee has an experience of 5 years, then it falls in third slab. The calculation of Gratuity Amount will be as follows:

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

1. Sum of all previous slabs: If Gratuity Amount calculation is based on Sum of all previous slabs, then amount will be the summation of product of individual slabs up to the year of experience and summation of Applicable Earnings Component. Based on above Gratuity Rules/slab, if an employee has an experience of 5 years, then the calculation of Gratuity Amount will be as follows:

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