Business Standard

The bigger impact of cuts in basic salary: Your gratuity may take a hit

If your basic and DA have been cut, total amount will be adversely impacted


Lawyers say going strictly by the provisions of The Payment of Gratuity Act, the amount payable would be based on last-drawn salary

Sanjay Kumar SinghBindisha Sarang
The salary cuts that have taken place will have a bigger impact on employees set to retire shortly. Besides taking a hit on their current income, they may also take home a smaller amount as gratuity — the retirement benefit given to employees who have rendered minimum of five years of service to an employer.

For each year of service completed (or part thereof in excess of six months), the employer pays gratuity at the rate of 15 days’ wages based on the rate of wages last drawn by the employee. Here, 15 days’ wages are calculated by dividing the monthly

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First Published: Jun 15 2020 | 8:00 PM IST

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