# Gratuity Calculator Pakistan

Source: Searchable (https://searchable.pk/tools/finance/gratuity-calculator)
Type: Calculator
Rates reviewed: 15 Sept 2026
Retrieved: 15 Sept 2026

Work out the gratuity you are owed when you leave a job in Pakistan: 30 days of your last drawn wages for every completed year of service, with six months or more counting as a full year, under the Standing Orders Ordinance.

Version 1.0.0. Inputs: Last drawn monthly wage, Completed years of service, Extra months beyond that.

## Worked example (default inputs)

- Last drawn monthly wage: 80000 PKR
- Completed years of service: 5
- Extra months beyond that: 7

**Gratuity for 6 years: Rs 480,000**

30 days of Rs 80,000 is Rs 80,000 per year of service. 5 years and 7 months count as 6 years, so Rs 480,000. That is 6 months of pay.

- Daily wage (monthly ÷ 30): Rs 2,667
- Per year of service (30 days): Rs 80,000
- Years counted: 6 (7 months rounded up to a year)
- Gratuity: Rs 480,000

## How it is calculated

Under **Standing Order 12(6)** of the Industrial and Commercial Employment (Standing Orders) Ordinance 1968 (and the near-identical Sindh Act of 2015), a workman whose service is ended by the employer, or who resigns after continuous service, is paid gratuity of **30 days' wages for every completed year of service or any part in excess of six months**, based on the **last drawn wages**.

- Daily wage = monthly wage ÷ 30.
- Gratuity = daily wage × 30 × counted years, where a final part-year of six months or more counts as one.
- Wages means basic pay plus dearness and cost-of-living allowances; bonus, overtime and travelling allowance are excluded.
- The employer may instead maintain a provident fund or pension scheme with contributions at least equal to gratuity; it cannot skip both.

Contract, daily-wage and piece-rate workers qualify once service is continuous for a year. Government service and some sectors (banking under separate rules) differ.

## Frequently asked questions

**Do I get gratuity if I resign?**

Yes. Resignation after at least a year of continuous service qualifies; dismissal for misconduct is the exception the law allows.

**Is gratuity calculated on gross or basic salary?**

On wages as defined in the Ordinance: basic plus dearness and cost-of-living allowances, at the last drawn rate. House rent, conveyance, bonus and overtime are not part of it.

**Is gratuity taxable?**

Gratuity from an approved fund is exempt. From an unapproved scheme, exemption is limited (the lower of a fixed cap and 50% of the amount) under the Second Schedule; the rest is added to salary income.

**Can the employer pay provident fund instead of gratuity?**

Yes, if the fund is approved and the employer's contribution is not less than the gratuity would be. Many companies run both; the law requires one.

## Sources

- Industrial and Commercial Employment (Standing Orders) Ordinance 1968, Standing Order 12(6); Sindh Terms of Employment (Standing Orders) Act 2015 (Provincial labour departments)

How to cite: "Gratuity Calculator Pakistan", Searchable, rates reviewed 15 Sept 2026, https://searchable.pk/tools/finance/gratuity-calculator