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Labour Code Gratuity and Wage Recalculator

Apply the Code on Wages 50% wage-component test and compare gratuity under the old wage structure against the Code on Social Security calculation.

Files are processed in your browser.No account required.No file upload required.Draft output for professional review.Not affiliated with government portals.

Input format

Paste rows with employeeName, basic, da, otherComponents, employmentType (permanent or fixed-term), and yearsOfService. Optional: retainingAllowance and terminationReason for under-5 permanent death/disablement review.

Expected columns: employeeName, basic, da, otherComponents, employmentType, yearsOfService

Employee pay-component rows

This field stays in your browser. Use synthetic data while testing.

Wage-test and gratuity comparison draft

Input diagnostics

Rows accepted for draft: 2 of 2 parsed.

Labour Code wage-test and gratuity comparison
Sample Employee A | wages 20000.00 | 50% test exceeded: true | effective wage base 38000.00 | eligible: true | gratuity old 80769.23 -> new 153461.54 (delta 72692.31) | Meets the 5-year continuous-service requirement (Code on Social Security 2020, Section 53). | The 50% test denominator here is wages plus otherComponents only. It does not add a gratuity or retrenchment-compensation figure into total remuneration, since those are not standard recurring monthly payroll components - the Ministry's own FAQ worked example includes them where relevant to a specific event, which can give a different total remuneration figure for that purpose.
Sample Employee B | wages 40000.00 | 50% test exceeded: false | effective wage base 40000.00 | eligible: true | gratuity old 23076.92 -> new 23076.92 (delta 0.00) | Fixed-term employee completing at least 1 year of the contract is exempt from the 5-year continuous-service rule (Code on Social Security 2020, Section 53(1)(d) and second proviso; the 1-year figure is Ministry of Labour FAQ guidance, not literal Act text). | Fixed-term gratuity is payable on a pro-rata basis per the second and third provisos to Code on Social Security 2020 Section 53(1)(d)/53(2); this tool applies the standard (wages/26)x15xyears formula and does not independently model the exact pro-rata mechanics - confirm the pro-rata figure against the Act text and the Ministry FAQ before relying on it. The 50% test denominator here is wages plus otherComponents only. It does not add a gratuity or retrenchment-compensation figure into total remuneration, since those are not standard recurring monthly payroll components - the Ministry's own FAQ worked example includes them where relevant to a specific event, which can give a different total remuneration figure for that purpose.
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Artifact metadata
Generated at: 2026-07-04T13:56:54.590Z
Local artifact ID: local-f93dac9c
Tool: Labour Code Gratuity and Wage Recalculator (/labour-code-gratuity-wage-recalculator)
Tool page: https://tools.complyeaze.com/labour-code-gratuity-wage-recalculator/
Tool package: complyeaze-tools@0.0.0
Artifact schema: review-text-v1
Input basis: Labour Code wage/gratuity rows
Expected columns: employeeName, basic, da, otherComponents, employmentType, yearsOfService
Detected delimiter: comma
Input headers: employeeName, basic, da, retainingAllowance, otherComponents, employmentType, yearsOfService, terminationReason
Rows parsed: 2; rows accepted for output: 2; blank rows skipped: 0; invalid rows needing review: 0.
Sources to verify:
- Ministry of Labour and Employment: The Code on Wages, 2019 - Section 2(y) (reviewed 2026-07-02) https://www.labour.gov.in/static/uploads/2025/06/c328da14bbb15fc4ad571dc33e7a4ab3.pdf
- India Code / Ministry of Law and Justice: The Code on Social Security, 2020 - Section 53 (as on 21 November 2025) (reviewed 2026-07-02) https://www.indiacode.nic.in/bitstream/123456789/16823/1/aA2020-36.pdf
- Ministry of Labour and Employment: Additional FAQs on Labour Codes (as on 16.03.2026) (reviewed 2026-07-02) https://www.labour.gov.in/static/uploads/2026/03/a4ccf4c6d97c4f1f36a6d83f8c64213d.pdf
Tool boundary:
- Does not compute leave encashment or PF contribution amounts; it only shows the recalculated wage base those figures would use.
- Does not apply state-specific Labour Code rules, which were still rolling out unevenly as of the last-reviewed date.
- Does not model the exact fixed-term pro-rata gratuity formula; it applies the standard formula and flags fixed-term rows for manual confirmation.
- Does not confirm whether the Payment of Gratuity Act, as now subsumed into the Code on Social Security, applies to a given establishment.
- Death and disablement exceptions are applied only when terminationReason is explicitly entered; otherwise under-5 permanent rows are sent to manual review.
Source register: https://tools.complyeaze.com/source/
Terms and disclaimer: https://tools.complyeaze.com/terms/
Privacy notes: https://tools.complyeaze.com/privacy/
Open-source repository: https://github.com/lamemustafa/complyeaze-tools
Browser-local draft: files are processed in your browser. No account or file upload required.
Draft local review artifact only. Not a filing instruction or final tax position.
Verify against official sources and professional judgment before use.

Draft output updated. Review it before downloading or sharing.

Source posture

Ministry of Labour and Employment: The Code on Wages, 2019 - Section 2(y)Reviewed 2026-07-02; refresh after 30 days.Used for: Wages definition and the 50% add-back proviso.
India Code / Ministry of Law and Justice: The Code on Social Security, 2020 - Section 53 (as on 21 November 2025)Reviewed 2026-07-02; refresh after 30 days.Used for: Gratuity formula, eligibility, and notified cap.
Ministry of Labour and Employment: Additional FAQs on Labour Codes (as on 16.03.2026)Reviewed 2026-07-02; refresh after 30 days.Used for: 50% wage rule worked example, fixed-term gratuity threshold.

What this creates

plain-text wage-test and gratuity comparison table
review checklist text

Downloaded draft includes

generated timestamp, local artifact ID, tool page, and package version
expected columns, detected delimiter, input headers, and row diagnostics
source links, source review dates, unsupported cases, and review caveats
Terms and disclaimer reference

Supported inputs

pasted employee rows with basic, DA, other remuneration components, employment type, years of service, and optional termination reason

What this does not decide

Does not compute leave encashment or PF contribution amounts; it only shows the recalculated wage base those figures would use.
Does not apply state-specific Labour Code rules, which were still rolling out unevenly as of the last-reviewed date.
Does not model the exact fixed-term pro-rata gratuity formula; it applies the standard formula and flags fixed-term rows for manual confirmation.
Does not confirm whether the Payment of Gratuity Act, as now subsumed into the Code on Social Security, applies to a given establishment.
Death and disablement exceptions are applied only when terminationReason is explicitly entered; otherwise under-5 permanent rows are sent to manual review.

Axal path

Track recurring payroll wage-structure reviews and gratuity provisioning history across employees in Axal.

Source explainer

The Code on Wages 2019 wage definition, the Code on Social Security 2020 gratuity section, and Ministry of Labour FAQs are used together; figures sourced only from the FAQs, such as the fixed-term 1-year threshold, are labeled as FAQ guidance rather than statute text.

Review workflow

Use the draft as a starting point, not a decision.

This page is meant for a one-off local review pass. Keep source documents beside the output and verify identities, dates, amounts, and assumptions before sending or filing anything.

Input guide

Use one row per employee with basic, da, otherComponents (all other monthly pay components besides basic/DA/retaining allowance), employmentType, yearsOfService, and optional terminationReason.
Set employmentType to permanent or fixed-term; fixed-term employees use a 1-year eligibility threshold instead of 5 years. For permanent employees below 5 years, enter terminationReason only when death or disablement needs to be reviewed.

Example workflow

Paste employee pay-component rows.
Review which rows exceed the 50% wage-component test and see the resulting effective wage base.
Compare the old and new gratuity figures for eligible employees before updating provisioning.

Related local tools

Review checklist

Confirm which pay components were included in otherComponents for each employee.
Confirm gratuity eligibility (5 years for permanent employees, death/disablement exceptions, and 1 year for fixed-term per Ministry FAQ guidance) before relying on a computed figure.
Re-check state-specific Labour Code rules for your establishment before finalizing any provisioning figure.

Common mistakes

Applying the 50% add-back to gratuity or retrenchment compensation; only components (a) through (i) of Section 2(y) are tested, not gratuity or retrenchment pay.
Treating the currently notified Rs 20 lakh gratuity cap as a fixed number in the Act text; it is a notified amount that can change by future notification.

When to move to Axal

Track recurring payroll wage-structure reviews and gratuity provisioning history across employees in Axal.

Common questions

Boundaries before you rely on the output.

Is the Rs 20 lakh gratuity cap fixed in the law?

No. The Code on Social Security, 2020 caps gratuity at an amount the Central Government notifies from time to time; Rs 20 lakh is the amount currently notified, not a number written into the Act itself.

Where does the 1-year fixed-term threshold come from?

It comes from a Ministry of Labour and Employment FAQ, not directly from the Act text. The Ministry's own FAQs state the Code prevails if there is any difference, so treat this as guidance to confirm, not final law.

Need this as a recurring workflow?

Keep this page for a one-off local draft. Use Axal when the same work needs saved mappings, client context, evidence trails, tasks, and review history.

Open Axal