Gratuity calculations look simple on paper but raise a lot of specific questions once you try to apply them to your own situation. Here's a thorough walkthrough.
The Basic Formula
Gratuity = (Last Drawn Basic Monthly Salary ÷ 30) × Gratuity Days × Years of Service. With the common 30-day rate, this simplifies to roughly one month's basic salary for each completed year of service.
A Worked Example
If your last drawn basic monthly salary is PKR 80,000 and you've completed 6 years of service, at the standard 30-day rate: Gratuity = (80,000 ÷ 30) × 30 × 6 = PKR 480,000 — effectively six months' worth of your basic salary. Try your own numbers with our Gratuity Calculator.
What Counts as "Basic Salary" Here
This calculation uses your basic salary specifically — not your full gross salary including allowances (house rent, medical, conveyance, etc.). This is an important distinction, since basic salary is often a smaller portion of total gross pay, meaning your gratuity is typically lower than "one month's total salary" might suggest.
Partial Years of Service
Some employers pro-rate gratuity for partial years (e.g., 6 years and 6 months might be calculated as 6.5 years), while others only count fully completed years — this depends on your specific company policy and contract, so it's worth confirming which approach applies to you.
When Gratuity Isn't Paid
Some employment contracts specify conditions under which gratuity isn't payable (such as termination for cause, or resignation before completing a minimum service period) — always check your specific contract's terms rather than assuming gratuity is guaranteed under all circumstances.
Try It Yourself
Use our free Gratuity Calculator with your own salary and service length for an instant estimate.