Gratuity Calculator Pakistan

How This Calculator Works

Calculate gratuity entitlement under Pakistan's labor laws. Formula: Last salary × Years × 30/26. Due after 1+ years of continuous service.

Gratuity Payout by Salary and Service Length

Gratuity Calculation and Legal Rights

The formula: Last Drawn Monthly Salary × Years of Service × 30/26. The 30/26 factor converts monthly salary to daily rate (26 working days assumed). Gratuity is a legal right after 1+ year of continuous service under Pakistan's labor laws — employers cannot waive or reduce it through employment contracts. Any such clause is legally void.

Gratuity is exempt from income tax up to Rs. 75,000 per completed year of service (verify current limit at fbr.gov.pk). Amount above the exemption is taxed at your applicable slab rate. For a 10-year employee, Rs. 750,000 of gratuity would be tax-free. The employer must pay within 30 days of separation — delays can be escalated to the Labour Department.

Keep your appointment letter, salary slips, and service records throughout your employment — you'll need them if the employer disputes the calculation. Some employers offer gratuity-equivalent provident fund contributions; in such cases, the provident fund balance may partially offset the gratuity obligation. Check your employment contract for the specific arrangement.

Gratuity — When and How to Claim

Resignation example: An accountant earning Rs. 100,000/month resigns after 8 years. Gratuity = Rs. 100,000 × 8 × 30/26 = Rs. 923,077. Tax exemption: Rs. 75,000 × 8 = Rs. 600,000 exempt. Taxable portion: Rs. 323,077. At the applicable slab rate (approximately 5-15%), tax on gratuity: Rs. 16,000-48,000. Net gratuity received: Rs. 875,000-907,000.

Termination example: If the same employee is terminated (not for misconduct), the gratuity entitlement is identical — Rs. 923,077. Termination does not reduce or eliminate gratuity rights. The only exception: dismissal for proven misconduct under the Standing Orders, which may forfeit gratuity — but the employer must prove misconduct through proper proceedings, not simply claim it.

What to do if employer delays payment: (1) Send a written demand letter citing the Payment of Wages Act and specifying the calculated amount. (2) Allow 30 days for response. (3) If unpaid, file a complaint with the Labour Department at the district level. (4) The Labour Court can order payment with interest on the delayed amount. Keep copies of your appointment letter, salary slips, and the demand letter — these form the basis of your legal claim.

When dealing with gratuity calculator pakistan, verify current requirements directly with the issuing authority before starting the process. Government procedures in Pakistan update periodically through administrative notifications that may not be immediately reflected on websites or in published guides. A 2-minute confirmation call to the relevant office or helpline prevents wasted trips with outdated documentation.

Gratuity Calculator — Employee Entitlement

When is gratuity payable?

After minimum 1 year of continuous employment. Payable upon resignation, termination, retirement, or death. The employer must pay within 30 days of separation.