End-of-service gratuity looks simple — 21 days of basic pay per year for the first five years, 30 days after — until you meet a real case. A mid-month exit, three stretches of unpaid leave, a salary change last quarter, and suddenly four spreadsheets disagree.
The base rules
- 21 days of basic salary per year of service, for the first five years
- 30 days of basic salary per year beyond five
- Calculated on the final basic salary — allowances excluded
- Total gratuity capped at two years’ total salary
- Unpaid leave days extend the service-period math
Where the edge cases live
Resignation during a limited contract, termination during probation, death-in-service settlements, and partial years all carry their own clauses. The 2022 Labour Law reform simplified some of these but changed the answers — settlements computed on pre-reform logic are quietly wrong.
Settlements you can defend
HRHub’s exit module computes the full settlement — gratuity, notice pay, leave encashment, deductions — item by item, with the legal basis for each line shown. HR approves a breakdown, not a mystery number, and the employee sees exactly how their settlement was built.
