Gratuity Calculator

A Gratuity Calculator helps you estimate the lump-sum amount you receive from your employer at the end of your service. In general, gratuity is an important financial benefit given to employees as a token of appreciation for long-term service. This tool lets you quickly calculate your expected gratuity based on your monthly salary and years of service.

What Is Gratuity?

Gratuity is a one-time payment made by an employer to an employee as a reward for continuous and loyal service. It is usually paid at the time of:

• Retirement
• Resignation after completing minimum required service
• Termination (except for misconduct)

For companies operating under the Shops and Establishments Ordinance, gratuity is mandatory when the employer does not offer an approved provident fund.

Gratuity Formula

In Pakistan, the standard gratuity formula for private-sector employees is:

Gratuity = Last Drawn Monthly Salary × Number of Completed Years of Service

Example:
If your salary is $ 60,000 and you worked for 8 years:
Gratuity = 60,000 × 8 = 480,000 USD

How to Use the Gratuity Calculator

Follow these simple steps:

1. Enter Your Monthly Gross Salary

This is your last drawn salary before deductions.
Includes:
✔ Basic salary
✔ Allowances (depending on company policy)

2. Enter Your Total Years of Service

Only completed years are counted.
Example: 7.8 years = 7 years.

3. Click “Calculate”

You will instantly see your gratuity amount.

Explanation of Terms Used in the Calculator

Monthly Gross Salary

Your full monthly salary before tax and deductions.

Years of Service

The total number of full years you worked for the employer.
Gratuity is calculated only on completed years, not months.

Gratuity Amount

The final lump-sum benefit payable by the employer based on the formula.

Why Gratuity Is Important – Benefits for Employees

Gratuity is more than just a payout—it provides long-term financial security. Here’s why it matters:

1. Acts as a Retirement Saving

Employees receive a good amount at retirement which helps them start their post-work life.

2. Reward for Loyalty

Encourages employees to stay longer with one employer.

3. Financial Cushion

This lump sum can help with emergencies, investments, home construction, or children’s education.

4. Supports Wealth Building

If invested smartly, gratuity can grow into a strong financial asset over time.

5. Legal Right Under Labor Laws

In many cases, employers are legally bound to pay gratuity if they do not contribute to a recognized provident fund.

Who Should Use This Gratuity Calculator?

This calculator is useful for:

• Employees planning to resign
• Employees close to retirement
• HR professionals
• Employers calculating end-of-service benefits
• Workers comparing gratuity vs provident fund benefits

Try our Free pension calculator. Click here

For updated pension rules. Click here