Calculating Gratuity

Dear HR Community,

We are in the construction industry and have several long-serving employees.

So we are thinking of rewarding them with a gratuity, a lump sum payment as a token of appreciation for the services they have provided towards the company.

While there is no legal requirement to do this, we feel that this is our way of showing our appreciation for those who have spent most of their working lives with us.

Our predicament though is how we can go about calculating the amount as gratuity. And whether there is an industry-standard or formula for this.

Thank you in advance for your replies and advice.

Regards

Fen

HR Poll: Do you give long-service employees a gratuity?

Yes: 51.35%

No: 37.84%

Considering: 8.11%

Not Sure: 2.70%

REPLIES & COMMENTS:

Dear Fen, it really depends on how much your company wants to pay accordingly to the years of service. most commonly is 5 yrs long service to give S$500 and 10 yrs give S$1,000, 15 yrs give S$1,500. with this calculation, there is NO CPF contribution. - Yang

Hi Fen, you can develop a Long Service Award policy to reward employees for their different tenures of employment. Eg 5 years 10 years 15 years etc This can be a motivational and engagement tool to recognize employees at different stages of their employment with your company. - Lucy

I think industry practice will be from 5 years with a long service award. However, in the majority of MNCs, they will start from 10 years onward. In my company, we are giving out $ 300+1 off day as gratuity for those already at 5-year services. Thereafter with 10 years, 15 years with the different amount given. - Joey

Hi, Fen You can develop a Long Service Award to recognize employees at every stage of their tenure milestones. Each stage will have a different monetary award eg 5 years 10 years 15 years etc etc

Our company provides long service awards, but not lump sum cash payments. - Ann

Yes, we are paying = 5 years at S$250, 10 years at S$500, and 15 years at S$750. The Company also rewards them with Long Service Leave once they reach their 10 years of service. - Elaine

Good to start long service award. 5, 10, 15, 20, 25 years In recognition of the loyalty and dedication of your people to the company. My company gives $500 (5yrs), $1000 (10yrs), and $1500 (15 yrs). They will receive a certificate of service plaque For 20 years, we have had a special pendant customised to my company plus $1500. - Jess