105 LearnersLast updated on June 29th, 2025
Calculator of Gratuity
Calculators are reliable tools for solving simple mathematical problems and advanced calculations like trigonometry. Whether you’re cooking, tracking BMI, or planning a construction project, calculators will make your life easy. In this topic, we are going to talk about the calculator of gratuity.
What is a Calculator of Gratuity?
A calculator of gratuity is a tool to figure out the amount of gratuity payable to an employee based on their salary and years of service. This calculator simplifies the process of computing gratuity, making it easier and faster, thereby saving time and effort.
How to Use the Calculator of Gratuity?
Given below is a step-by-step process on how to use the calculator:
Step 1: Enter the last drawn salary: Input the last drawn salary into the given field.
Step 2: Enter the years of service: Input the total number of years of service.
Step 3: Click on calculate: Click on the calculate button to compute the gratuity and view the result.
How to Calculate Gratuity?
To calculate gratuity, there is a simple formula that the calculator uses. Gratuity is calculated based on the formula: Gratuity = (Last drawn salary × Years of service × 15) / 26
This formula is used because, in a month, the average number of working days is considered to be 26. The factor of 15 represents 15 days of salary for each year of service.
Tips and Tricks for Using the Calculator of Gratuity
When using a calculator of gratuity, there are a few tips and tricks to make the process smoother and avoid errors:
Understand the organization’s gratuity policy, as it may vary.
Remember to consider only the basic salary and dearness allowance for gratuity calculation.
Use precise figures for salary and years of service to ensure accuracy.
Common Mistakes and How to Avoid Them When Using the Calculator of Gratuity
We may think that when using a calculator, mistakes will not happen. But it is possible for errors to occur when using a calculator.
Mistake 1
Rounding too early before completing the calculation.
Wait until the very end for a more accurate result. For example, rounding the salary or years of service prematurely can lead to incorrect gratuity amounts.
Mistake 2
Forgetting to include the correct salary components
Ensure that only the basic salary and dearness allowance are included in the calculation, as other components are not considered for gratuity.
Mistake 3
Incorrectly interpreting the years of service
Make sure to count the full years of service correctly, as this directly affects the gratuity amount. Partial years may not be counted if below a certain threshold.
Mistake 4
Relying on the calculator a bit too much for precision
When using calculators, remember that the result is an estimate. Double-check with your HR policies for exact figures.
Mistake 5
Assuming all calculators will handle all scenarios.
Calculators may not account for specific organizational policies or exceptions. Always verify with official company guidelines.
Calculator of Gratuity Examples
Problem 1
How much gratuity is payable for an employee with a salary of $5,000 and 10 years of service?
Use the formula: Gratuity = (Last drawn salary × Years of service × 15) / 26
Gratuity = (5000 × 10 × 15) / 26 ≈ $28,846.15
So, the gratuity payable is approximately $28,846.15.
Explanation
By inserting the figures into the formula, we calculate the gratuity by multiplying the salary, years, and then dividing by 26.
Problem 2
An employee has a last drawn salary of $3,000 and 8 years of service. Calculate the gratuity.
Use the formula: Gratuity = (Last drawn salary × Years of service × 15) / 26
Gratuity = (3000 × 8 × 15) / 26 ≈ $13,846.15
Thus, the gratuity payable is approximately $13,846.15.
Explanation
The calculation involves multiplying the salary by the years of service and the factor, then dividing by 26.
Problem 3
Find the gratuity for an employee with a salary of $6,500 and 15 years of service.
Use the formula: Gratuity = (Last drawn salary × Years of service × 15) / 26
Gratuity = (6500 × 15 × 15) / 26 ≈ $56,250.00
Therefore, the gratuity payable is approximately $56,250.00.
Explanation
The formula is applied to compute the gratuity based on the given salary and years of service.
Problem 4
How much gratuity does an employee receive with a salary of $7,000 and 12 years of service?
Use the formula: Gratuity = (Last drawn salary × Years of service × 15) / 26
Gratuity = (7000 × 12 × 15) / 26 ≈ $48,461.54
Therefore, the gratuity payable is approximately $48,461.54.
Explanation
The result is obtained by using the gratuity formula with the given inputs.
Problem 5
An employee earns $4,500 and has completed 20 years of service. What is the gratuity amount?
Use the formula: Gratuity = (Last drawn salary × Years of service × 15) / 26
Gratuity = (4500 × 20 × 15) / 26 ≈ $51,923.08
Therefore, the gratuity payable is approximately $51,923.08.
Explanation
By applying the given salary and years of service to the formula, the gratuity is calculated.
FAQs on Using the Calculator of Gratuity
1.How do you calculate gratuity?
2.Is gratuity calculated on the full salary?
3.Why do we use 15/26 in the gratuity formula?
4.How do I use a calculator of gratuity?
5.Is the gratuity calculator accurate?
Glossary of Terms for the Calculator of Gratuity
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Gratuity: A financial sum paid to employees based on salary and years of service upon leaving a job.
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Basic Salary: The fundamental salary without additional allowances or bonuses.
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Dearness Allowance: A cost of living adjustment allowance paid to employees.
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Years of Service: The total number of years an employee has worked for an organization.
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Rounding: Approximating a number to its nearest whole number for simplicity or clarity.
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Seyed Ali Fathima S
About the Author
Seyed Ali Fathima S a math expert with nearly 5 years of experience as a math teacher. From an engineer to a math teacher, shows her passion for math and teaching. She is a calculator queen, who loves tables and she turns tables to puzzles and songs.
Fun Fact
: She has songs for each table which helps her to remember the tables
