What is 15/26 in Gratuity Calculation?

15/26 means your employer pays 15 days' wages for every year you worked, and a month is counted as 26 working days. So gratuity = last drawn monthly wage × 15 ÷ 26 × years of service, which works out to about 57.7% of one month's wage for each year.

The formula is the same under the Code on Social Security, 2020, which replaced the Payment of Gratuity Act from 21 November 2025. What changed is the wage figure that goes into it.

Where the 15 and the 26 come from

The 15 is written into the law. Section 53(2) of the Code on Social Security says gratuity is paid at fifteen days' wages for every completed year of service, based on the wage you last drew.

The 26 is written in too. An explanation under the same section says that for a monthly-rated employee, fifteen days' wages are found by dividing the monthly wage by twenty-six and multiplying by fifteen. The old Payment of Gratuity Act used the same wording, so nothing changed here in November 2025.

The usual reading of 26 is a 30-day month minus four Sundays. Your daily wage is your monthly wage ÷ 26, and you get 15 of those days per year.

Two groups are calculated differently. Workers in seasonal establishments get 7 days' wages per season. Piece-rated workers still get 15 days, but their daily wage is the average of the three months before they leave.

A worked example

Take an employee whose statutory monthly wage is ₹60,000 and who leaves after 12 years and 8 months.

1.      Daily wage: ₹60,000 ÷ 26 = ₹2,307.69

2.      Fifteen days' wages: ₹2,307.69 × 15 = ₹34,615 for each year of service

3.      Years counted: 8 months is more than six, so 12 years 8 months counts as 13 years

4.      Gratuity: ₹34,615 × 13 = ₹4,50,000

That is below the ₹20 lakh ceiling, so the full amount is payable. You can check your own figure in the gratuity calculator, which shows each of these steps.

Why 26 and not 30 matters

Dividing by 26 pays you about 15% more than dividing by 30, because each "day" is worth more. On the example above, 15/30 would give ₹60,000 × 15 ÷ 30 × 13 = ₹3,90,000, which is ₹60,000 less. At 13 years of service the gap is exactly one month's wage.

I think 26 is the most quietly generous number in Indian payroll, and it deserves more attention than it gets. If someone quotes you a gratuity figure, check which divisor they used before you check anything else.

You will still see 30 in one place. For employees whose employer is not covered by the gratuity law, the tax exemption is worked out on half a month's average salary per completed year, which behaves like 15/30. That is a tax calculation, and it does not by itself decide what the employer must pay.

What counts as "wages" now

Open your last payslip rather than your offer letter. The CTC figure on the offer letter is the wrong number to put into 15/26.

Under the Code, wages for gratuity mean basic pay, dearness allowance and any retaining allowance. There is a catch that did not exist before: if the allowances the Code excludes, such as HRA and conveyance, add up to more than 50% of your total pay, the excess is added back to wages.

Say your monthly pay is ₹1,00,000, with basic and DA at ₹35,000 and allowances at ₹65,000. Allowances are ₹15,000 over the 50% line, so your wage for gratuity becomes ₹50,000, not ₹35,000. Over 10 years that adds about ₹86,500 to your gratuity.

The Labour Ministry has said the revised wage definition applies to gratuity from 21 November 2025. How employers treat service before that date is still being worked through, so ask your HR or payroll team which wage figure they will use.

How years of service are counted

Every completed year counts, and a leftover part-year counts as a full year only if it is more than six months. So 9 years 7 months counts as 10, while 9 years and exactly 6 months stays at 9.

Three other rules decide whether 15/26 applies at all:

•       You need five years of continuous service before gratuity is payable on resignation or retirement.

•       The five-year rule does not apply on death or disablement.

•       Fixed-term employees qualify after one year, and their gratuity is worked out pro rata on the time actually served.

The statutory payment is capped at ₹20 lakh. An employer can pay more under a contract or company policy, but the law only requires up to the cap.

Common 15/26 mistakes

•       Putting total CTC or take-home pay into the formula instead of the statutory wage.

•       Dividing by 30, which understates gratuity by roughly 13%.

•       Rounding exactly six extra months up to a full year.

•       Ignoring the 50% add-back, which can raise the wage used for anyone with a low basic and high allowances.

•       Treating the ₹20 lakh cap as only a tax rule. It also caps what the law requires your employer to pay.

•       Assuming every employee needs five years. Fixed-term employees qualify after one.

Frequently asked questions

Why is gratuity divided by 26?

The Code on Social Security says that for a monthly-rated employee, fifteen days' wages are calculated by dividing the monthly wage by 26 and multiplying by 15. The usual explanation is a 30-day month minus four Sundays.

Has the 15/26 formula changed under the new labour codes?

No. The formula carried over unchanged from the Payment of Gratuity Act to Section 53 of the Code on Social Security, 2020. What changed from 21 November 2025 is the definition of wages that goes into it.

Is 15/26 used for every employee?

It applies to monthly-rated employees. Seasonal workers get 7 days' wages per season, and a piece-rated worker's daily wage is the average of their last three months' pay.

Does six months of extra service count as a full year?

Only if it is more than six months. Exactly six months does not round up.

When is 15/30 used?

For employees whose employer is not covered by the gratuity law, the tax exemption uses half a month's average salary per completed year, which works like 15/30. It is a tax calculation, not the amount the employer must pay.

Before you close this tab

Run your own numbers in the gratuity calculator. It applies 15/26, the six-month rule and the ₹20 lakh cap, and shows the tax-exempt portion.

Then write down who your gratuity nominee is. Gratuity is paid to the nominee on your employer's record, and a form signed on your joining day can still name a parent ten years after you married. The free Personal Record Book gives you one place to record nominees alongside your bank accounts and policies.

This article is for investor education only. It is not legal, tax or employment advice. Your actual gratuity depends on your employment records, your employer's coverage and policy, and the law in force when you leave.