How the 2-Year Basic Salary Cap Works
Article 51 CapThe cap protects employers from unlimited liability for long-serving employees while ensuring senior workers receive substantial severance:
- Cap Formula:
Maximum Gratuity = Last Monthly Basic Salary × 24. - When Does an Employee Hit the Cap? An employee reaches the 2-year cap after approximately 25 to 26 continuous years of service.
- Exclusions from the Cap: Accrued annual leave encashment and notice period pay in lieu are not subject to the 2-year gratuity cap and must be paid in full on top of the maximum gratuity.