Which wages are used to work out gratuity?

Gratuity is based on the rate of wages you last drew s. 53(2).
Wages include basic pay and dearness allowance, and allowances are added back if they are more than half of your total pay s. 2(88).

Gratuity calculator 50% rule calculator

Last checked 1 Nov 2026 · written from the official text · not reviewed by a lawyer. This explains the law in general and does not decide your case.

What the Labour Ministry says

“Any payment made to employee which is not part of components mentioned under section 2(88) of the Code on Social Security, 2020 shall not be considered for calculation of gratuity.” FAQ 13, Additional FAQs, 16 Mar 2026: official copy · our copy
“Gratuity, based on revised definition of wages will be applicable w.e.f. 21.11.2025 i.e. date of implementation of the Codes.” FAQ 6, Additional FAQs, 16 Mar 2026: official copy · our copy

This is the Ministry's explanation, not the law. Its FAQs and Handbook say the Codes prevail.

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