GRATUITY AND BONUS

PROCEDURE
MEANING

Gratuity is a benefit which is payable under the

Payment of Gratuity Act 1972. Gratuity is a sum of
money paid by an employer to an employee for services
rendered in the company. But, gratuity is paid only to
employees who complete five or more years with the
company.

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TYPES OF GRATUITY
 Retirement gratuity: which is admissible to the govt.
servant on his retirement after completion of 5 year
qualifying service .

Death gratuity :which is payable to his

nominees/family in the event of his death while in
service

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 GRATUITY ELIGIBILITY CRITERIA

1. Following are the few instances when you will be eligible

to receive gratuity.
2. An employee retires
3. An employee resigns after working for 5 years with a
single employer
4. An employee passes away or suffers disability due to
illness or accident

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Gratuity Calculation Formula

Salary = Basic +Dearness allowance

Avg.no of days considered for calculation =30
26days=30-4 Sundays
15=Half month salary considered for gratuity calculation

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BONUS -MEANING

A bonus is extra money that an employee receives on top

of his or her wages or salary. The person may receive the
extra payment for good performance.

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BONUS CALCULATION

Calculation of bonus will be as follows: If Salary is equal

to or less than Rs. 7000/- then the bonus is calculated on
the actual amount by using the formula: Bonus = Salary
x 8.33/100.

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TYPES OF BONUS

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. PERFORMANCE BONUS: This kind of bonus is given to employees
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based on their performance in a given period e.g. year or quarter

2. FESTIVAL BONUS: This type of bonus is linked to some occasion or

festival in the local location of operations of the company e.g. New Year

3. REFERRAL BONUS: If a company has a referral program, then on a

successful referral the existing employee can be given bonus.

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4. JOINING BONUS: When a new employee joins a company, he or she
can be offered a one time joining bonus

5. RETENTION BONUS: This bonus is given as a one time payment to

retain the employee in the organization

6. MISCELLANEOUS BONUS: This can be given on some special event

e.g. on 25th anniversary of the company, every employee gets a
smartphone

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THANK YOU