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Severance Pay Calculator

India has no general statute that grants severance on exit, which makes each package a mix of law and negotiation. Gratuity is statutory, notice pay follows your contract, and the severance months themselves are whatever the appointment letter or settlement promises. This calculator assembles the three legs into one total so you can see which part is owed to you and which part you are free to negotiate.

Enter values

The wage all three legs of the package are built on

Days the company waves off (or buys) instead of you serving them

Completed years with this employer

Months of basic + DA the offer letter or settlement promises

Results update as you type.

Results

Total separation package
₹4,66,153.85
Notice pay (unserved, ÷ 26 a day)
₹69,230.77
Gratuity (statutory)
₹2,76,923.08
Agreed severance (2 months)
₹1,20,000.00

How is the Severance Pay calculated?

Enter monthly basic plus DA, the unserved notice days the company is buying, your completed years of service, and the severance months your agreement guarantees — one month per year of service is a common negotiating anchor. The page returns the total package as the headline, then splits it into notice pay on the 26-day rule, gratuity under the statute, and the agreed severance.

Formula

Total = notice pay + gratuity + severance. Notice pay = basic + DA ÷ 26 × unserved days. Gratuity = basic + DA × 15 ÷ 26 × years of service, nil below five years and capped at ₹20,00,000. Severance = monthly basic + DA × agreed months. Each leg draws on the same wage, so raising the months under negotiation never disturbs the statutory two.

Example

Basic plus DA of ₹60,000, 30 notice days unserved, 8 years of service and 2 agreed severance months: notice pay is 60,000 ÷ 26 × 30 = ₹69,230.77, gratuity is 60,000 × 15 ÷ 26 × 8 = ₹2,76,923.08, and severance is 2 × ₹60,000 = ₹1,20,000. Together that is ₹4,66,153.85. With only three years of service the gratuity leg vanishes and the package totals ₹1,89,230.77.

Things to remember

Before signing, verify each leg: recompute gratuity against your last drawn wage, confirm which notice days are being bought, and check that the severance months match your letter. Dues like encashed leave and bonus belong in the same conversation. The income-tax page shows which legs are exempt.

Frequently Asked Questions

Is severance pay mandatory in India?

There is no general severance right. Retrenchment under the Industrial Disputes Act applies to workmen in establishments with 100 or more employees after 24 months' service — 15 days' wages per year plus notice — while everyone else receives whatever the contract or settlement grants.

What should a severance package include?

At minimum: unserved notice pay, statutory gratuity, the agreed severance months and any encashed leave balance. Bonus dues and expense reimbursements should appear too. The calculator totals the first three so you can check them against the offer letter.

Is severance pay taxed in India?

Gratuity is exempt up to ₹20,00,000 and retrenchment compensation under the Industrial Disputes Act is exempt up to ₹5,00,000, but severance your contract simply promises is usually taxable salary at your slab rate. Notice pay is always taxable.

How many months of severance should I negotiate for?

One month of basic + DA per year of service is a frequent starting anchor for voluntary exits, with room to move for senior roles or if a clause is vague. Know your statutory floor first — gratuity and notice pay are owed regardless of what gets negotiated.

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