Gratuity is a financial benefit given to employees as a form of gratitude for their service to an organization. It is typically provided upon retirement, resignation, or termination, provided the employee has completed a specified minimum period of service. To configure gratuity settings in Timelabs payroll, follow these steps:


Step 1: Navigate Setup Menu -> Gratuity Settings. You will see two buttons there.

  • Add New: To update gratuity settings with a new effective date.
  • Edit: To update currently configured gratuity settings


Step 2 : After selecting Add New/Edit button below tab will open where we can update gratuity related details.

Field descriptions:

  • With Effect Date: Set the effective date for the new settings.
  • Maximum Gratuity Limit: Define the maximum limit for the gratuity amount.
  • Minimum Years for Gratuity Eligibility: Set the minimum number of years an employee must work to be eligible for gratuity.
  • Number of Months Considered as One Year: Specify the number of months that will be rounded off to one year.
  • Gratuity Rate (In Case of CTC Part): Set the gratuity rate.
  • Remarks: Add any remarks if required.
  • Gratuity Calculate On RATE/EARNED: Choose the calculation basis for gratuity.
  • Salary Components GROSS SALARY/SALARY HEADS: Select the salary components used for gratuity calculation. If "Salary Heads" is selected, you need to choose the specific salary heads.

Once all mandatory details are filled in, click on the Save button.


Step 3 : After configuring gratuity settings we can calculate gratuity from Benefits -> Gratuity option:


Step 4 : Click on the Add New button to calculate gratuity for an employee. Then Click on Select Employee. A new window will open where you need to choose the employee(s) from the list (either ex-employees or active employees).


Step 5 : Once you add an employee, their details will be displayed based on the updated employee information and service period. The gratuity amount will be calculated according to the updated gratuity settings.



Under the Gratuity Calculation section on above screen, you can edit the gratuity details. Payment mode is also mandatory to select above. You can set payment mode as Cash, Cheque, DD and F&F.


Step 6 :  After Saving Employee Gratuity above the updated record will reflect in the gratuity list where you can view, edit, or delete the created gratuity for the employee.


If the payment mode is FNF, the gratuity amount will reflect in the final settlement like below: