The daily rated labours gratuity is a sum of money paid to the labourer by his employer on account of his services in excess of what would be due if he had been working at the rate for which he was hired, and it varies according to the number of days worked during the year.
How To Calculate Daily Rated Labours Gratuity
Gratuity for daily rated labours is available for people who have completed five years of continuous service or have died in the facility.
- The amount of gratuity payable to a deceased daily rated worker is calculated as per the following formula:
- The gratuity shall be at the rate of ₹100/- per day for every year of service, up to five years; and
- In addition to this, if the deceased was on a regular salary, it will be increased by 10% over the basic pay.
- If the deceased had been on a special allowance, the gratuity shall be increased by 20%.
- A gratuity of ₹500/- shall be paid in case of death by accident.
For daily paid gratuity for employees can be calculated as follows:
- For those who have worked for less than one month, the gratuity shall equal the basic wage.
- For those who have served between 1-3 months, the gratuity shall amount to 50% of the basic wage.
- For those who have served more than 3 months, the gratuity will be 75% of the basic wage (75% of the basic wage 0.75 x Basic Wage).
- In case of death due to accidental causes, the gratuity will not exceed ₹300/-.
How To Calculate Gratuity for Weekly Rated Labours ?
Weekly rated employees are entitled to weekly gratuity which is calculated as per the below-mentioned formula:
(1.0xBasic Wages + 0.5xSpecial Allowance)/52 Weekly Gratuity
Example: A weekly rated employee earns ₹2000/- per week. He gets an additional ₹200/- as Special Allowance. His total gross wage is ₹3000/-. Therefore his weekly gratuity will be ₹3000/52 +0.5 i.e ₹58.47/-.
How To Calculate Monthly Rated Labours Gratification?
Monthly rated employees are entitled to monthly gratuity which is calculated according to the below-mentioned formula: (1.0xBasic Salary + 0.5xAllowances)/12 Months Gratuity
Example: A monthly rated employee earns ₹5000/- per month. He gets an additional allowance of ₹400/-. His total monthly earnings are ₹6000/-. Hence his monthly gratuity will be ₹6500/12 + 0.5 i.e ₹55.83/-.
How To Determine Gratuity Payable On Death Of An Employee?
An employee is entitled to gratuity on death if he or she dies within two years after joining the company.
The gratuity is payable to the dependents of the deceased employee as per the rules laid down under the Employees’ Provident Fund Act.
What Are The Benefits Of Gratuity?
Benefits of Gratuity include:
- Payment of medical expenses incurred during treatment of illness or injury
- Expenses associated with funerals
- Compensation for the deceased employee’s family members
- Payment of pension to the surviving spouse of the deceased
- Payment of gratuity to the dependent children of the deceased
- Assuring the financial security of the deceased employee’s family
- Helps in meeting medical expenses incurred by the family members
- Provides relief to the family members during their period of grief
- Support for family members in the event of job loss
- Provides financial assistance to the family following the death of an employee
- Helping in providing a secure future to the dependents of deceased employees
- Improves efficiency and morale of the organisation
- Promotes a healthy work environment
- Increases productivity of the organisation.
How To Calculate Gratuity?
Gratuity For Daily Rated Labours should be calculated based on the following factors.
- Basic salary
- Allowances if any
- Length of service
- Date of joining
- Date of retirement
- Age at time of retirement
- Period covered by gratuity
- Number of dependents
- Severity of disability
- Type of employment contract
- Whether the employee was married or unmarried
- Whether the company has provided health insurance for its employees
- Whether the employer provides life insurance cover for its employees
- Whether the employer pays provident fund contribution
- Whether the employees have been paid off their dues
- Whether the employers have made contributions towards social security, etc
- Whether the government has granted concessions like reservation of seats, free education, etc., to the employees
- Whether there is any other benefit available to the employee
- Whether the employee has died due to accident, disease, suicide, etc
- Whether the employee had retired before he/she died
- Whether the deceased employee had taken leave prior to his/her death
- Whether the company has given special benefits to the deceased employee
Note: In all cases where the above-mentioned conditions are met, the amount of gratuity shall be determined according to the provisions of section 20(2) of the EPF Act.
Note: If the employee has died more than 2 years after joining the company, then no gratuity will be payable. However, if the employee has died within 2 years of joining the company, then gratuity may be payable.
Note: If an employee retires with full pay and allowances, but does not join another organisation, then gratuity may not be payable.
Note: If an employee retires with half pay and allowances, but joins another organisation, then gratuity may not be payable.
Conclusion – Gratuity For Daily Rated Labours
In order to calculate the amount of gratuity for daily rated labours, it is necessary to know the basic salary of the employee, whether the employee is married or unmarried, whether the company has provided health coverage, whether the employer pays provident funds, etc. as discussed above.
It is also important to note that the amount of gratuity depends upon various circumstances such as type of employment contract, date of joining, date of retirement, age at the time of retirement, the period covered by gratuity, number of dependents, the severity of the disability, type of employment contract, whether the company has made contributions towards social security and so on. Therefore, it is very difficult to give any definite answer about the amount of gratuity. The best thing one can do is to consult a lawyer who specialises in labour law. Please contact our team to assist you.
