What is gratuity?
Gratuity (also called an end-of-service benefit) is a lump sum an employer pays a worker when their employment ends — on resignation, retirement or termination — as a reward for their years of service. It's separate from your final salary and any provident fund.
How gratuity is calculated
The common formula is: Gratuity = (last drawn monthly salary ÷ 30) × days of wage per year × years of service. The "days per year" depends on the law or contract:
- Pakistan — 30 days' wages for each completed year of service (Standing Orders Ordinance). A part-year over six months usually counts as a full year.
- Gulf (e.g. UAE) — commonly ~21 days' wages per year for the first five years, and 30 days per year after that.
This calculator applies your chosen basis uniformly — use the custom option to match your exact contract.
Important notes
- Rules differ by country, sector and contract — this is an estimate, not legal advice.
- "Salary" here means the wage your gratuity is based on (often basic pay, sometimes basic plus fixed allowances). Check which applies to you.
- Minimum service periods and eligibility conditions may apply.
Is gratuity taxable?
It depends on your country and amount — some jurisdictions exempt gratuity up to a limit. Check your local tax rules.
Does a partial year count?
Often a period beyond six months is rounded up to a full year, but this varies. Adjust the "years" figure to match your rule.
Basic salary or gross?
Many laws base gratuity on basic pay (sometimes plus fixed allowances), not total gross including variable bonuses. Use the figure your contract specifies.