Gratuity in Frappe HR: Calculating & Paying Out Gratuity
A Gratuity is the lump sum payable to an employee on separation or retirement, in recognition of their years of service. Frappe HR computes it from a gratuity rule applied to the employee’s tenure and salary, then pays it out taking a statutory calculation that’s easy to get wrong and making it automatic.
You will find it under Home > Human Resources > Payroll > Gratuity.
BEFORE YOU START
Have the Employee, a Gratuity Rule, and the employee’s salary details in place, since the gratuity is calculated from the rule applied to their tenure and applicable earnings.
How to create a Gratuity
- Open the Gratuity list and click New.
- Select the Employee and the Gratuity Rule.
- Set the relevant date. Frappe HR fetches the employee’s work experience and applicable salary and computes the Gratuity Amount.
- Set how it will be paid, for example, via the salary slip or an additional salary and the payable account.
- Save, then Submit.
How the amount is worked out
The gratuity amount comes straight from the chosen Gratuity Rule: the employee’s years of service and applicable earnings are run through the rule’s slabs and fractions to give the payable figure. Because the rule encodes your policy, you don’t calculate by hand you select the employee and rule, and the amount follows.
NOTE
Gratuity is usually processed as part of an employee’s exit, alongside their separation and final settlement. Make sure their tenure and salary records are accurate before computing it, since both feed directly into the amount.
TIP
Keep your Gratuity Rule current with the law, and the Gratuity document does the rest. Letting the system compute the figure removes the manual error that creeps into hand-calculated gratuity important, since it’s a statutory payment employees are entitled to exactly.
Related Topics
- Gratuity Rule
- Employee Separation
- Salary Component
- Salary Slip
- Additional Salary
SUMMARY
A Gratuity is the lump sum paid to an employee for their years of service on separation or retirement. Create it by selecting the employee and a Gratuity Rule and setting the date, Frappe HR fetches their work experience and applicable salary and computes the amount via the rule’s slabs and fractions. Choose how it’s paid and the payable account, then submit. Processed as part of an exit, it relies on accurate tenure and salary, and an up-to-date rule keeps this statutory payment correct.
