Gratuity Calculator

The Employment Code Act No. 3 of 2019 (Section 73) sets the minimum gratuity at 25% of the total basic pay earned during a long-term contract. Employers may offer a higher rate, but cannot go below 25%.

Employees on long-term contracts - contracts exceeding 12 months - qualify for gratuity upon contract completion. This applies to fixed-term contracts, not permanent and pensionable positions where pension benefits apply instead.

Yes. Gratuity payments are treated as income under the Income Tax Act (Section 21) and are subject to PAYE tax. NAPSA contributions (5%, capped) and NHIMA (1%) may also apply depending on the employment arrangement.

Gratuity is paid at the end of a fixed-term contract as agreed or by statute. Severance pay (Section 54) is compensation when an employer terminates employment due to redundancy. They serve different purposes and are calculated differently.

Gratuity is calculated on basic pay only - the standard rate of pay before allowances, bonuses, or overtime. Housing allowance, transport allowance, and other benefits are excluded from the calculation.

Yes. The 25% is a legal floor, not a cap. Employers and employees are free to agree on a higher rate in the employment contract. Rates of 30%, 33.3%, and 35% are common depending on the industry and seniority.

You can file a complaint with the Labour Commissioner under Section 116 of the Employment Code Act. The Commissioner can mediate, and if unresolved, the matter can be referred to the Industrial Relations Court for enforcement.

Yes. Under Section 73, gratuity is calculated on basic pay earned during the period actually worked. If your contract ends early - whether by mutual agreement, redundancy, or lawful termination - you are entitled to gratuity for the months served.

No. Gratuity under Section 73 applies only to employees on long-term contracts exceeding 12 months. Casual workers (contracts under one month) and short-term contract workers do not qualify for statutory gratuity.

Under Section 43, an employer must pay all terminal benefits - including gratuity - within 30 days of the contract ending. Failure to pay within this period may attract penalties and interest.

Example: An employee earns K8,000 basic pay per month on a 3-year contract at 25%. Total basic pay earned = K8,000 x 36 months = K288,000. Gross gratuity = K288,000 x 25% = K72,000. If tax applies: NAPSA (5%) = K1,861.80 (capped), NHIMA (1%) = K720, and PAYE is calculated on the remainder using ZRA income tax bands.