If you have completed 4 years and 8 months with the same employer, calculate gratuity assuming eligibility and then verify whether your service legally qualifies.
Standard gratuity formula (confirmed law):
Gratuity = (Last drawn Basic & DA × 15 ÷ 26 × Completed years of service
Key calculator rule that matters here:
If the final year exceeds 6 months, it is rounded up to the next full year for calculation.
That means:
- 4 years 8 months → counted as 5 yearsfor calculation, if gratuity eligibility is established
The real confusion is not the formula. It is eligibility.
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Are employees eligible for gratuity at 4 years 8 months?
The black-letter rule (confirmed)
Under the Payment of Gratuity Act, 1972, gratuity is payable after completion of 5 years of continuous service, except in cases of death or disablement.
On paper, this reads as:
- Less than 5 years → not eligible
But this is not how the rule is applied in practice.
How “5 years” is legally interpreted in practice
Continuous service definition (critical)
An employee is deemed to be in continuous service if they have worked:
- 240 days or more in a year (190 days for certain establishments)
Courts have repeatedly interpreted this to mean:
- 4 years + 240 days ≈ 5 years of continuous service
Since 240 days ≈ 8 months, this is where the 4 years 8 months threshold comes from.
Judicial position (settled but not codified)
Multiple High Courts have held that employees who complete:
- 4 years and 240 days
are eligible for gratuity
This interpretation is:
- Widely followed
- Legally defensible
- Commonly applied by employers and controlling authorities
However, it is not explicitly written in the Act.
What actually happens on the ground
If you resign after 4 years 8 months
- Many private employers do pay gratuity
- Especially large organizations, MNCs, and compliance-driven firms
- Smaller employers may resist, citing “less than 5 years”
If gratuity is disputed
- Labour authorities often side with employees if 240 days are completed
- Employers usually settle rather than litigate
Practical reality:
4 years 8 months is treated as gratuity-eligible service in most real cases.
Calculate Your Gratuity Amount
Use our gratuity calculator to estimate your payable gratuity based on the latest calculation method and proposed wage definition under the new labour codes.
Open Gratuity CalculatorNote: Final applicability depends on official notification of labour codes.
How to calculate gratuity once eligibility is accepted
Completed years for calculation
Once eligibility is established:
- Service beyond 6 months is rounded up
So:
- 4 years 8 months → 5 years
- 5 years 7 months → 6 years
Example calculation
Last drawn Basic + DA: ₹30,000
Eligible service: 5 years
Gratuity = 30,000 × 15 ÷ 26 × 5
= ₹86,538 (approx.)
This is the amount most online gratuity calculators in India will show.
Important clarifications that prevent mistakes
Notice period does not add service
Only actual working days count toward the 240-day threshold.
Leave and holidays
- Paid leave
- Weekly offs
- Declared holidays
are included while counting continuous service.
Contract vs permanent employees
If you are on payroll and covered under the Act:
- Employment type does not matter
- Continuous service does
Status of labour codes and gratuity rules
As of now:
- The Payment of Gratuity Act, 1972 continues to apply
- New labour codes have not replaced gratuity provisions in practice
- No notified rule has removed or altered the 240-day interpretation
This means:
- The 4 years 8 months principle remains valid today
Bottom line
- The formula is clear and undisputed
- The eligibility threshold is interpreted through continuous service
- 4 years 8 months (240 days) is widely treated as gratuity-eligible
- Courts and labour authorities consistently support this view
If you have crossed this threshold, use the gratuity calculator with 5 years of service, and you are on strong legal footing.