The Gratuity Formula, 15/26 Explained
By Varun M
Gratuity = (last drawn monthly wages × 15 × completed years of service) ÷ 26. The 15 and the 26 aren't arbitrary — here's what each one represents, with a clean worked example.
Gratuity Calculator
Run the formula on your own wages and service period.
The short answer
15 represents 15 days' wages paid for every completed year of service — a half-month-per-year convention. 26 represents the standard working days in a month (a 6-day work week, excluding 4 Sundays), used to convert your monthly wages into a daily rate before multiplying by those 15 days.
How it's calculated
A clean example: ₹30,000/month in wages, exactly 10 years of service.
daily wage rate = ₹30,000 / 26 = ₹1,153.85 gratuity per year = ₹1,153.85 × 15 = ₹17,307.69 total gratuity = ₹17,307.69 × 10 years = ₹1,73,076.92
Or in one line: (₹30,000 × 15 × 10) ÷ 26 = ₹1,73,076.92.
Why not use 30 days, or a full month?
26 specifically reflects a 6-day working week (30 or 31 calendar days minus roughly 4 Sundays), which is the standard convention this formula has used since the Payment of Gratuity Act, 1972 — carried forward into the Code on Social Security, 2020. Using 15 days (half a month) per year, rather than a full month, reflects that gratuity is meant as a fraction of a year's wages per year served, not a full month's pay per year.
What the formula doesn't change under the new labour code
The 15/26 arithmetic is unchanged. What the new code changes is the wages figure the formula runs on — via the 50% wage rule, which can raise your statutory wage base even without a raise. See gratuity calculation under the new labour code for a worked example of that effect, and gratuity eligibility rules in India for who qualifies to use this formula at all.
FAQ
The formula pays out 15 days' wages for every completed year of service — a half-month-per-year convention that has been the basis of gratuity calculations in India for decades, carried forward from the Payment of Gratuity Act, 1972 into the new Code on Social Security.
26 represents the standard number of working days in a month (a 6-day work week, excluding 4 Sundays) — this is the divisor used to convert your monthly wages into a daily rate before multiplying by the 15 days per year.
No — the formula itself is unchanged. What the new code changes is the wages figure the formula runs on, via the 50% wage rule (see gratuity calculation under the new labour code).
The 15/26 formula applies broadly to monthly-rated employees covered by the gratuity provisions. Specific employment categories can have different treatment — confirm your own situation if you're unsure which applies.
Your last drawn monthly wages — Basic + Dearness Allowance + retaining allowance — not your full CTC.
Last verified: 11 Aug 2026
Sources: Code on Social Security, 2020; Payment of Gratuity Act, 1972 (formula convention).
This is an indicative estimate based on the gratuity formula as understood at the time of writing. The final Central Rules were not fully confirmed as of this verification date. Confirm your exact entitlement with your employer's HR/payroll team or a qualified professional before relying on this for financial decisions.