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