Gratuity: Impact of LOP on Gratuity

For calculating gratuity, few companies will deduct the LOP days from their total years of experience and the remaining days will be considered to calculate the gratuity.

We have the options available to deduct the lops days or consider the total days.

Refer below screen:

None: Total experience is considered for gratuity calculation irrespective of LOP days

After Experience Calculation: Experience is calculated after deducting LOP days from the service. That experience will be considered for gratuity calculation as per the slabs defined.

Ex: Lets say employee service period from 05-05-2015 to 12-11-2018, total days is 1288 = 3.5 yrs

Assume LOP days 200, so 1288-200= 1088 = 2.98 yrs.

Refer below slab:

Assume his 30days salary is 23000.

after lop days his experience is 2.98 falls under 3rd slab, for 21days salary.

=23000*21/30=16100. Gratuity = 16100*2.98=47991/-

Before Experience Calculation: Including LOP days, Experience is calculated for gratuity calculation as per the slabs defined.

For calculating the gratuity, the total lop days will be deducted and the amount will be calculated for the remaining days.

From the same example as mentioned above, for before experience calculation,

2.98 yrs falls under 2nd slab so 15days salary will be given i.e., 11500

gratuity = 11500*2.98=34247/-

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