Severance pay in India 2026: notice, severance and unemployment benefit

When a job ends in India, the calculator above estimates the statutory severance pay, the notice period, the payment for unused leave and the unemployment benefit, with the tax on each part. Below you will find the rules in brief and examples for different lengths of service.

The rules in brief

• Gratuity: After 5 years of continuous service (1 year on a fixed-term contract) you get 15 days’ wages for each year: wages × 15 ÷ 26 × years, where a part year of more than 6 months counts as a full year. Wages are basic pay, at least half of your total pay. It is paid whether you resign, retire or are let go (not after dismissal for serious misconduct), at most ₹20 lakh, and is tax-free up to that amount.
• Retrenchment: Workers (not managers or supervisors) with at least a year of service get one month’s notice or pay instead, 15 days’ wages for each year of service (tax-free up to ₹5 lakh) and another 15 days’ wages from the Worker Re-skilling Fund. Large establishments (300 or more workers) need government permission. There is no general unemployment benefit; ESIC schemes help some low-paid insured workers for a limited time.

Example: ₹50,000 gross a month

Case: “Retrenched (worker with at least 1 year of service)”, leaving on 31 December 2026, without unused leave. These are legal minimums; a contract or collective agreement may give more.

What you receive: an example

With 9.8 years of service and 10 days of unused leave, ending on 31 December 2026:

Frequently asked questions

Rules and official sources: see “Rules applied (2026)” above. Last checked: October 2026. The amounts are estimates for information, not financial or legal advice.