Gratuity is a retirement benefit provided to employees who have served a certain number of years with their employer. It is a lump sum amount paid to an employee as a token of appreciation for their service. If you are eligible for gratuity and are wondering how to withdraw the amount, this step-by-step guide will help you through the process.
Step 1: Check Your Eligibility
Before you proceed with the gratuity withdrawal process, it is important to ensure that you are eligible for the benefit. According to the Payment of Gratuity Act, 1972, an employee is eligible for gratuity if they have completed a minimum of five years of continuous service with their employer. This condition applies to both private and government sector employees.
Step 2: Calculate Your Gratuity Amount
Once you have confirmed your eligibility, the next step is to calculate your gratuity amount.
Gratuity = (Last drawn salary x number of years of service x 15) / 26
In this formula, the last drawn salary refers to your basic salary plus dearness allowance. The number of years of service refers to the total number of years you have worked with your employer, and the factor 15/26 represents 15 days of salary for each completed year of service.
For example, if your last drawn salary is Rs. 50,000 per month, and you have worked with your employer for 10 years, your gratuity amount will be:
Gratuity = (50,000 x 10 x 15) / 26 Gratuity = Rs. 2,88,461.54
Know more here: New Gratuity rules for private sector employees
Step 3: Submit Your Gratuity Application
Once you have calculated your gratuity amount, you need to submit an application to your employer to initiate the withdrawal process. The application should include the following details:
- Your full name and address
- Your date of birth
- Your date of joining and leaving the company
- Your last drawn salary
- Your total number of years of service
- Your gratuity amount
Make sure you submit your application to your employer at least 30 days before the date of your retirement or resignation.
Step 4: Receive Confirmation from Your Employer
Once your employer receives your gratuity application, they will verify the details and calculate the gratuity amount. They will then issue a notice to you informing you of the amount and the date on which the payment will be made. This notice should be issued within 15 days of receiving your application.
Step 5: Withdraw Your Gratuity Amount
On the date specified in the notice, you can withdraw your gratuity amount from your employer. You will need to visit the HR department of your employer and provide the following documents:
- Your gratuity notice
- Your identity proof (such as Aadhaar card, PAN card, or passport)
- Your bank account details (to receive the payment)
Once you provide these documents, your employer will process the payment and transfer the gratuity amount to your bank account.
Withdrawing your gratuity amount can be a simple and straightforward process if you follow the steps outlined above. It is important to ensure that you are eligible for the benefit and have calculated your gratuity amount accurately. By submitting your application and following up with your employer, you can receive your gratuity payment on time and enjoy the benefits of your hard work and dedication.