Gratuity in a private job in Pakistan is 30 days' wages for every completed year of service, plus a full year for any part year over six months. On a wage of Rs 120,000 with 7 years 8 months of service that is Rs 120,000 x 8 = Rs 960,000.
Government employees with 5 to 10 years of service get a different gratuity instead of pension: one month's pay for each completed year. Switch to "Federal government" above for that.
How to calculate gratuity in Pakistan
- Count the years. Take your completed years. If the part year is more than six months, add one year. Exactly six months does not count; six months and one day does.
- Find 30 days' wages. With a monthly wage, 30 days' wages is one month's wage. Some employers work out a daily wage by dividing by 26 working days, which gives more.
- Multiply: 30 days' wages x years.
| Service | Years counted | Gratuity on Rs 120,000 |
|---|---|---|
| 7 years 8 months | 8 | Rs 960,000 |
| 5 years 6 months | 5 | Rs 600,000 |
| 5 years 6 months 1 day | 6 | Rs 720,000 |
If your employer divides by 26, the first case becomes Rs 120,000 / 26 x 30 x 8 = Rs 1,107,692.
The law on gratuity
The rule comes from Standing Order 12(6) of the West Pakistan Industrial and Commercial Employment (Standing Orders) Ordinance 1968. Since the 18th Amendment some provinces have their own versions, such as the Sindh Terms of Employment (Standing Orders) Act 2015 and the Khyber Pakhtunkhwa and Balochistan Standing Orders Acts, with the same 30-day rule.
These laws cover industrial and commercial establishments. Where the employer runs a provident fund or a pension fund, your gratuity rights can differ, so check your appointment letter and the fund rules. Many banks and large companies run a gratuity fund with their own written formula.
Which wage? The law says wages. Most employers pay gratuity on the last basic pay, and some on gross pay. Your contract or the gratuity fund rules decide this, so enter the wage they name.
Gratuity on Rs 100,000 a month
Thirty days' wages for each year of service.
| Years of service | Gratuity on Rs 100,000 a month | If daily wage is monthly / 26 |
|---|---|---|
| 1 | Rs 100,000 | Rs 115,385 |
| 3 | Rs 300,000 | Rs 346,154 |
| 5 | Rs 500,000 | Rs 576,923 |
| 10 | Rs 1,000,000 | Rs 1,153,846 |
| 15 | Rs 1,500,000 | Rs 1,730,769 |
| 20 | Rs 2,000,000 | Rs 2,307,692 |
| 25 | Rs 2,500,000 | Rs 2,884,615 |
Gratuity for government employees
A federal government servant needs 10 years of qualifying service for pension. With at least 5 but under 10 years, the AGPR pension manual gives a gratuity of one month's pensionable pay for each completed year, or one and a half months where service ends through invalidity or death.
Example: last pensionable pay Rs 120,000 and 7 years 3 months of service gives Rs 120,000 x 7 = Rs 840,000. With 9 years 6 months, the six months count as a year, you reach 10 years and get a pension instead: use the pension calculator.
Is gratuity taxable in Pakistan?
Gratuity paid to federal and provincial government employees is exempt from income tax under the Second Schedule to the Income Tax Ordinance 2001. Gratuity from a private employer is exempt only up to limits set in the same schedule, and the limits differ for approved gratuity funds. We have not confirmed the current limits, so ask your payroll team or a tax adviser before you file. Tax on the rest of your salary is on the salary tax calculator.
Gratuity questions
What is the gratuity formula in Pakistan?
Gratuity = 30 days' wages x years of service, with a part year of more than six months counted as a full year. With a monthly wage, 30 days' wages is simply one month's wage. So 8 counted years on Rs 120,000 gives Rs 960,000.
Is gratuity calculated on basic or gross salary?
On wages, as your contract or the gratuity fund rules define them. Most private employers use the last basic pay; some use gross pay. The difference is large, so check your appointment letter before you rely on a figure. Enter that wage in the calculator.
What is the difference between gratuity and provident fund?
Gratuity is paid by the employer alone when you leave, based on your last wage and years of service. A provident fund is a savings account: you and your employer both pay in every month, and you get the balance with profit. Some employers offer one, some the other, and some both.
Does six months of extra service count?
Only if it is more than six months. The law says any part of a year in excess of six months counts as a full year. So 5 years 6 months gives 5 years of gratuity, while 5 years 6 months and 1 day gives 6 years.
How much gratuity do government employees get?
Those with 10 or more years get a pension instead. Federal employees with 5 to 10 years get one month's pay for each completed year of service. Pick "Federal government" in the calculator to work it out.
Last reviewed 29 September 2026. Results are estimates; official notices always take precedence.