Question

Mr. Bader joined bank Muscat in the IT Department on the 28th of March 2001. As...

  1. Mr. Bader joined bank Muscat in the IT Department on the 28th of March 2001. As per the agreement with the employer, he is promised a starting basic pay of RO. 500 per month along with other allowances. His gross starting salary adding all allowances amounts to RO. 750. As per the terms and conditions in the contract, he is entitled for an increment (increment added to basic salary) after the completion of one year service. He retired from service on 20th March 2020 when he was drawing a gross salary of RO. 1650 including all allowances RO. 350.

A) You are required to calculate the gratuity payable to Mr. Bader

Homework Answers

Answer #1

Gratuity is a benefit received by an employee for services rendered to an organisation. For companies covered under the Gratuity Act, this benefit is paid when an employee completes five or more years of service with the employer. An employee gets gratuity when he/she resigns, retires or is laid off.

The gratuity amount depends upon the tenure of service and last drawn salary.

It is calculated according to this formula: Last drawn salary (basic salary plus dearness allowance) X number of completed years of service X 15/26.

According to this formula, the time period of over six months or more is considered as one year.

Last Drawn Salary of Mr. Bader = RO. 1650

No. of Completed years of Service = 19 yrs

Gratuity = 1650 x 19 x 15/26

= RO. 18086.54

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