Gratuity Calculator Sri Lanka (Payment of Gratuity Act)

Enter how you are paid, your last drawn wage, and your service dates to estimate gratuity under the Payment of Gratuity Act No. 12 of 1983. The Act sets two different formulas depending on whether you are paid monthly or by the day, and both require five completed years of service with an employer of fifteen or more people.

The wage at the point service ends, not an average of the whole employment.

Qualifies for gratuity. Service of 8 years meets the 5-year minimum and the employer is covered by the Act.

Gratuity payable

LKR 400,000

LKR 50,000 × 8 completed years

Service

8y 0m 0d

2,922 days

Per completed year

LKR 50,000

15 days of wage

Years counted

8

exact

Gratuity is separate from EPF and ETF, which are contributory funds and are payable regardless of length of service. This is an estimate of the statutory minimum; a contract or collective agreement may provide more.

The two formulas in the Act

Section 5 of the Payment of Gratuity Act does not set one rate. It splits employees by how they are paid, and the two rates are close but not identical: half a month is fifteen days of wage, while the daily-rated basis is fourteen.

Both measure against the wage last drawn rather than an average of the employment, so a raise shortly before leaving raises the whole entitlement, not just the final year.

Gratuity per completed year of service under Section 5
How the employee is paidEntitlement per yearOn a wage of
Monthly rateHalf a month's wage (15 days)Rs. 100,000/month = Rs. 50,000 per year
Daily or piece rate14 days' wageRs. 2,500/day = Rs. 35,000 per year

Who qualifies

Two conditions have to hold at once, and failing either one removes the statutory entitlement entirely rather than reducing it.

  • The employee has completed five years of continuous service with that employer.
  • The employer employed fifteen or more people on any day in the twelve months before the employment ended.
  • The reason for leaving does not matter - resignation, retirement, and termination are treated alike.
  • Forfeiture is provided for only in narrow circumstances involving damage or loss caused by the employee.

Worked example for a salaried employee

An employee on a last drawn salary of Rs. 100,000 a month who joined on 1 January 2018 and left on 1 January 2026 has eight completed years of service. Half a month's wage is Rs. 50,000, so gratuity is Rs. 400,000.

On a daily rate of Rs. 2,500 across the same eight years, the entitlement is fourteen days at Rs. 2,500 for each year, or Rs. 35,000 a year, giving Rs. 280,000.

Gratuity at Rs. 100,000 a month by length of service
Completed yearsQualifiesGratuity
4 yearsNoRs. 0
5 yearsYesRs. 250,000
8 yearsYesRs. 400,000
10 yearsYesRs. 500,000
20 yearsYesRs. 1,000,000

The part-year question

The Act pays for each year of completed service. Read strictly, an employee who leaves after seven years and six months is paid for seven, and the six months are lost. That reading is what the headline figure in this calculator uses.

In practice many employers, and most collective agreements, pay the final part-year proportionally. On a Rs. 60,000 salary that six-month remainder is worth Rs. 15,000 - enough to be worth asking about before signing off on a final settlement. The calculator shows both numbers side by side for that reason.

How gratuity differs from EPF and ETF

All three are end-of-employment money, which is why they are often confused, but only gratuity is paid by the employer at the point of leaving and only gratuity has a service-length condition.

Gratuity compared with the two contributory funds
GratuityEPFETF
Funded byEmployer, at the endEmployee 8% + employer 12%Employer 3%
Minimum service5 yearsNoneNone
Paid byThe employerThe EPFThe ETF Board
Depends on employer sizeYes, 15 or moreNoNo

Before you rely on the figure

Treat the result as a planning estimate and check it against your contract and your final settlement statement before agreeing to a figure.

  • Confirm the last drawn wage that will be used, and whether allowances form part of it.
  • Check whether your contract or collective agreement improves on the statutory minimum.
  • Ask which part-year treatment your employer applies.
  • Gratuity is a terminal benefit for tax, taxed under the IRD's terminal-benefits tables, not the regular monthly APIT table.
  • Unpaid or disputed gratuity is raised with the Commissioner of Labour, not the Inland Revenue Department.

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Frequently asked questions

Section 5 of the Payment of Gratuity Act sets two formulas. An employee on a monthly rate receives half a month's wage for each year of completed service. An employee on a daily or piece rate receives fourteen days' wage for each year of completed service. Both are measured against the wage last drawn, not an average across the whole employment.

Five years of continuous service with the same employer. Below that there is no statutory entitlement, whatever the reason for leaving. The five years are counted to the day, so an employee one day short of the anniversary does not qualify.

The Act binds an employer who employed fifteen or more people on any day during the twelve months before the employment ended. A smaller employer is outside the Act, although a contract or collective agreement can still promise gratuity independently.

The Act says gratuity is paid for each year of completed service, which on a strict reading drops any part-year. In practice many employers and collective agreements pay that final period proportionally. This calculator shows both figures so you can see the difference and check which one your contract or the Department of Labour applies to you.

No. EPF and ETF are contributory funds paid into during employment and are due regardless of how long you worked. Gratuity is a separate terminal payment made by the employer at the end of service, and only after five completed years. An employee can receive all three.

Gratuity is a terminal benefit and is not treated as regular monthly employment income. The Inland Revenue Department publishes separate APIT tables for qualifying terminal benefits, with their own thresholds and rates. This calculator shows gratuity before any tax - check the current terminal-benefits table or ask your employer for the amount that will actually be withheld.

Yes. The Act does not distinguish between resignation, retirement, and termination, so long as the five-year qualifying period and the employer-size condition are both met. Forfeiture is provided for only in narrow circumstances involving damage or loss caused by the employee.

Entitlement under the Payment of Gratuity Act turns on completing the required period of continuous service at an employer above the size threshold, rather than on how the employment ends. The specific circumstances can matter, so check with the Department of Labour if your employer disputes a claim.