- Request letter format for gratuity rules in pakistan how to#
- Request letter format for gratuity rules in pakistan manual#
Similarly, the minimum wages for skilled and semi-skilled workers is also based on 26 days in a month. "month" means a normal working period of twenty-six days calculated at the rate of forty-eight hours of work per week.
The 26-days month is defined in the Explanation of Section 3 of the Minimum Wages for Unskilled Workers Ordinance, 1969 i.e. For service of more than six months, gratuity is payable otherwise not. Six-month rule is followed to decide whether to pay gratuity for the last year of service depending upon whether the service is more or less than six months. Finally, calculate the payable amount of gratuity for the entire service period, the formula is per day wage x 30 (rate of gratuity) x No.Rate per day is multiplied by the rate of gratuity which is 30 days wages (i.e.Calculate per day wage rate based on 26-days in a month, by dividing monthly wages by 26-days.
Request letter format for gratuity rules in pakistan how to#
How to calculate the amount of Gratuity payable?įollowing is the procedure to calculate the payable gratuity of an eligible worker: Right now the present rate of gratuity is 30-days wages for every completed year of service or for any period in excess of six months in the same establishment. (iii) length of service should be excess to six months or more.Įarlier the rate of gratuity was 15-days of wages for each completed year of service and later on, it was revised as 20-days wages. According to various Courts judgments, it is the nature of duties he is performing rather than his designation or wages which determine whether he is a "workman" or not.
Request letter format for gratuity rules in pakistan manual#
(ii) an employee is a "workman" as defined in Section 2(i) of this Ordinance as someone who is employed to do any skilled or unskilled, manual or clerical work. industrial or commercial, in respect to the number of workmen employed, as explained above. (i) provision of statutory gratuity is applicable to the establishment i.e. There are the following conditions to check the entitlement of gratuity: Gratuity becomes payable at the time of separation from services which could be: (i) by resignation by the workman, (ii) termination of services by the employer due to any reason other than misconduct (in case of proved misconduct employer is not bound to pay gratuity), (iii) in case of death and (iv) retirement or superannuation of a worker. Which Establishment is Liable to Pay Gratuity?Īs per Section 1 of the Ordinance, the provision of gratuity becomes applicable to: every commercial establishment employing or employed twenty or more workmen and every industrial establishment employing or employed fifty or more workmen, on any day during the preceding twelve months. Provided further that if through collective bargaining the employer offers and contributes to an “Approved Pension Fund” as defined in the Income Tax Ordinance, 2001, and where the contribution of the employer is not less than fifty per cent of the limit prescribed in the aforesaid Ordinance, and to which the workman is also a contributor for the remaining fifty per cent or less, no gratuity shall be payable for the period during which such contributions has been made.]” Industrial & Commercial (Standing Orders) Ordinance, 1968 defines, “where a workman resigns from service or services are terminated by the employer, for any reason other than misconduct, shall be entitled for gratuity equivalent to thirty (30) days wages, calculated on the basis of the (wages admissible to him in the last month of service if he is a fixed-rated workman or the highest pay drawn by him during the last twelve months if he is a piece-rated workman), for every completed year of service or any part thereof in excess of six months: provided that, where the employer has established a provident fund to which the workman is a contributor and the contribution of the employer to which is not less than the contribution made by the workman, no such gratuity shall be payable for the period during which such provident fund has been in existence. The commercial establishment employed 20 or more workmen OR any industrial establishment employed 49 or more workmen, directly or indirectly, during any days of preceding 12-months, are legally liable to offer at least any one of these retirement benefit. “Gratuity” or “Provident Fund” or “Approved Pension Fund”. There are three different retirement benefits defined in Standing Order 12(6) i.e. Since then payment of gratuity is a legal benefit of the eligible worker. Before May 1972, the payment of gratuity by the employer was on a voluntary basis, after that it was incorporated in Standing Orders and becomes a statutory obligation of employers. Gratuity is one of the retirement benefits for long service.
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