Document text
Gratuity — new rules
My gratuity under section 53 of the Code on Social Security, 2020, and the application to my employer
Employee: [YOUR NAME]
Employer: [EMPLOYER NAME]
Service: [FIRST DAY] to [LAST DAY]
Reason: [RESIGNATION / RETIREMENT / END OF FIXED-TERM CONTRACT]
1. Wages for gratuity (the 50% rule)
Per month Amount
Basic pay + dearness allowance ₹ [AMOUNT]
Other allowances (HRA, conveyance, special allowance…) ₹ [AMOUNT]
Total remuneration ₹ [AMOUNT]
Allowances above 50% — added back ₹ [AMOUNT]
Wages for gratuity ₹ [AMOUNT]
2. The calculation
Step Amount
Service [YEARS] years [MONTHS] months
Years counted (part year above six months = one more) [N]
15 days' wages = wages ÷ 26 × 15 ₹ [AMOUNT]
Gratuity before the ceiling ₹ [AMOUNT]
Gratuity to claim (ceiling ₹20 lakh) ₹ [AMOUNT]
The rules (Code on Social Security, 2020, Chapter V) • When (s. 53(1)): on superannuation, retirement or resignation, death or disablement, and at the end of a fixed-term contract — after at least five years of continuous service. • Five years not needed (s. 53(1), second proviso): on death or disablement and at the end of fixed-term employment; a fixed-term employee is eligible after one year of service under the contract, and a further part year above six months counts as one more year (Social Security (Central) Rules, 2026, rule 33(1)(a)). • How much (s. 53(2)): 15 days' wages for every completed year of service or part of a year above six months, at the wages last drawn. • Monthly-rated (s. 53, Explanation 3): 15 days' wages = monthly wages ÷ 26 × 15. • Ceiling (s. 53(3)): the amount notified by the Central Government — currently ₹20 lakh (Ministry FAQ, 30.12.2025). • Wages (s. 2(88)): basic pay, dearness allowance and retaining allowance; if allowances such as HRA and conveyance are more than 50% of all remuneration, the excess is added back to wages. • From 21 November 2025, the date the Codes came into force, gratuity is paid on the wages last drawn under the Code on Social Security, 2020 (Ministry FAQs). • Better terms (s. 53(5)): an award, agreement or contract that gives more gratuity still applies. • Claim and payment (s. 56; Social Security (Central) Rules, 2026, rule 33): apply to the employer in Form IV, ordinarily within 30 days; the employer pays within 30 days of the gratuity becoming payable, with simple interest if late.
3. Application for payment of gratuity
[DATE]
To
The HR Manager
[COMPANY NAME]
[CITY]
Subject: Application for payment of gratuity
Dear Sir/Madam,
I joined the company on [FIRST DAY] as [DESIGNATION], and my employment ends on [LAST DAY] on account of [REASON]. I request you to pay the gratuity due to me under section 53 of the Code on Social Security, 2020.
My last drawn wages for gratuity are ₹ [AMOUNT] per month, and by my calculation the gratuity is ₹ [AMOUNT]. Kindly share your computation, and credit the amount to my bank account:
Bank details
Account holder [NAME AS IN BANK]
Bank and branch [BANK, BRANCH]
Account number [ACCOUNT NUMBER]
IFSC [IFSC]
I enclose a copy of my appointment letter, my last payslip and my relieving letter (or retirement order).
Yours faithfully,
[YOUR NAME]
[EMPLOYEE CODE]
[PHONE]
A worksheet, not legal advice. Form IV and the time limits are in the Social Security (Central) Rules, 2026, rule 33; state rules may differ — ask your employer or the Labour Department of your state. Check at the start of the year.