India severance and exit cost calculator.
Enter salary, tenure, and notice status. See notice pay, gratuity, retrenchment, leave encashment, and total exit cost by state under the Labour Codes. No email wall.
Full monthly salary including allowances (before PF deduction).
Used for gratuity and retrenchment calculations. Typically 30 to 50% of gross.
Affects gratuity eligibility (5+ years) and retrenchment multiplier.
Employee already gave notice; pay only balance if any.
Severance breakdown
- Notice pay (30 days gross)
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- Gratuity (if 5+ years)
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- Retrenchment comp (if applicable)
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- Leave encashment (15 days est.)
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Total severance cost
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Employer obligation for compliant exit under Labour Codes.
This estimate assumes employer-initiated redundancy and statutory minimums. Disputed exits, pending dues, or state-specific variations may increase cost. Verify with local counsel.
How severance is calculated under Labour Codes.
Notice and notice pay
Code on Industrial Relations 2020 mandates 30 days notice from either party for permanent employees. If not served, pay full 30 days at gross salary. If already served by employee, reduce the amount. Probationers and fixed-term contracts may have lower notice.
Gratuity (Payment of Gratuity Act 1972)
Payable for 5+ years of continuous service at (Basic + DA) x 15/26 x years of service (15 days of pay per year on a 26-day month). Capped at 20 lakh rupees. Under 5 years, typically not payable unless policy is more generous.
Retrenchment and leave encashment
Retrenchment applies to non-managerial workers under employer-initiated redundancy: 15 days of average pay per completed year of service under the Industrial Disputes Act. Leave encashment: earned leave paid at gross divided by 26 per day. This tool assumes 15 days accrued unless you specify otherwise.
Worked example
On the default ₹1,00,000 gross with 5 years of service and no notice served, the total exit cost is ₹5,76,923 across notice pay, gratuity, retrenchment compensation, and leave encashment.
Severance calculator, answered.
Questions about India employee exit costs and statutory obligations.
What is included in India severance pay?
Notice pay (30 days or unserved portion at full gross salary), gratuity if employed 5+ years (15/26 of Basic+DA times years, capped at 20 lakh), retrenchment compensation if employer-initiated, leave encashment (earned leave paid out), and re-skilling fund if 50+ headcount.
Is notice pay mandatory?
Yes. Code on Industrial Relations 2020 mandates 30 days notice from either party for permanent employees. If the employee has already served notice, you pay only the unserved portion. If employer-initiated redundancy without notice, you pay 30 days full gross.
When is gratuity payable?
Gratuity is payable if the employee has 5 or more years of continuous service. Formula: (Basic + DA) x 15/26 x years of service (15 days of pay per year worked, on a 26-day month). Capped at 20 lakh rupees. Under 5 years, gratuity is typically not payable.
What happens to unused leave at exit?
Earned leave (paid vacation) must be encashed at full daily wage (gross divided by 26 days). Casual and sick leave are typically forfeited in most states unless state law allows encashment or carryover. The tool assumes 15 days earned leave accrued unless you specify otherwise.
When is a severance calculator the wrong tool?
When the exit involves disputes, non-compliance back-pay, contested tenure, or complex restructuring. At that point, you need a full employment law audit and settlement negotiation. Speak to us for state-specific counsel.
Longer reading: India exit and Full and Final Settlement guide · EOR services in India · Related tool: gratuity calculator
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