The most Googled question in the country right now is “how gratuity is calculated in Zambia?”. But before we dive into answering this question let’s first discuss what is gratuity. Well, a gratuity is a financial element that is offered to an employee by an employer in a bid to recognize the contributions and services rendered by the employee to the organization. This is part of the salary that the employee receives and can be considered a benefit plan designed to assist someone in their retirement.

Gratuity is paid by the employer to an employee who is leaving his job either going to another or retiring after working for the company for not less than five years. It can consider as a thanksgiving gift to an employee for continued service to the company.

How Gratuity Is Calculated In Zambia

The employee is only entitled to a gratuity if he or she meets the retirement requirements and has an uninterrupted five-year tenure, meaning they should not have had gaps in terms of working in the five years. However, gratuity can also be paid by the employer if an employee dies or the employee becomes incapacitated due to an accident or other worst-case scenario.

Gratuity Act

The Gratuity Act is a law that helps provide financial assistance to workers after completing a certain period of work in an organization. According to this law, employees are entitled to a total of 15 days of wages for each year worked.

How gratuity is calculated

The formula for calculating gratuity is:

(15 x Your last salary x duration of tenure)/26 – for the workers that are covered in the gratuity Act.

(15 x Your last salary x duration of tenure)/30 – for employees who are covered and who are not included in the Gratuity Act.

Therefore, taking the employee’s last drawn is K12,000, and the duration of tenure has been 5 years, the gratuity will then come down to:

(15 x 12,000 x 10)/26 = K69,231 for an employee captured in the Gratuity Act.

Even if the organization is not part of the Gratuity Act, it is not prohibited from paying gratuity to its employees. However, the semi-monthly salary for each year completed is used as the basis for calculating benefits. Salary includes commission, fondness allowance, and base salary.

The following is the formula for calculating gratuity for those who are not captured in the Gratuity Act.

(15 x tenure x 10)/30

Taking the same figure of K12,000 as salary, the following is the calculation of gratuity for an employee who is not captured in the Gratuity Act.

(15 x 12,000 x 10)/30 = K60,000

In the event of the death of an employee, the gratuity is calculated based on the employee’s tenure irrespective of the number of years he or she worked even if they did not clock five years.

Assuming the employee worked for 2 years before he or she died and the last drawn salary is K10,000 and that they were not included in the Gratuity Act, the calculation of the gratuity would be as follows;

(15 x 10,000 x 10)/30 = K50,000

How Gratuity Is Calculated In Zambia Online

For example, you can calculate your gratuity online through software and tools in the country. Recommended online gratuity calculation web app is called Gratuity calculator. You only need to type your basic salary and number of days showing continuous service for years. Then you will know how much the employer is supposed to pay you according to the Zambian Gratuity Act.