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Gratuity Contributions Calculator For Contract Workers & Employees

Calculate gratuity payments based on basic pay, service period, and gratuity percentage. Updated with standard 25% rate and customizable options.

Salary Details

Standard Gratuity Percentage is 25%
When checked, calculates PAYE tax, NAPSA (5%), and NHIMA (1%) deductions from gratuity amount. Gratuity is taxable per Income Tax Act Section 21.

Results Summary (Earnings)

Final Gratuity Amount
K0
Total gratuity payment based on your inputs
Basic Pay K 0.00
Months In Service 0
Gratuity Percentage 0
Total Earnings For the Period K 0.00
Gross Gratuity at 25% K 0.00

How to Calculate Gratuity (2025)

  1. Enter your basic pay. This is your monthly salary before any deductions.
  2. Enter the number of years or months you have worked. This is the period of service for which you are calculating the gratuity.
  3. Select the gratuity percentage. This is usually specified in your contract. The standard gratuity percentage in Zambia is 25%.
  4. The calculator will first calculate your total earnings for the period of service. This is done by multiplying your basic pay by the number of months you have worked.
  5. The calculator will then calculate the gratuity amount. This is done by multiplying your total earnings by the gratuity percentage.
  6. The calculated gratuity amount is the amount you are entitled to receive as gratuity.

Gratuity Legal Framework & Compliance (Employment Code Act 2019)

Governing Law

Gratuity payments are governed by Section 73 of the Employment Code Act 2019 and must be included in employment contracts for fixed-term employees. Note: Section 54 covers severance pay, not gratuity.

Key Requirement: Section 73(1) states employers shall pay gratuity "at a rate of not less than twenty-five percent" of basic pay earned during the contract period.

Official Documents:
📄 Download Employment Code Act (PDF)

Understanding Gratuity Payments

1. When is Gratuity Payable?

Gratuity is payable when:

  • Fixed-term contract expires (most common)
  • Contract completion with gratuity clause
  • Mutual agreement between employer and employee
  • Specific contractual terms are met
2. How is Gratuity Calculated?

Standard Formula:

  • Total Earnings = Basic Pay × Months of Service
  • Gratuity Amount = Total Earnings × Gratuity Percentage
  • Common Rate: 25% of total earnings (but can vary by contract)
3. Tax Implications

Important tax considerations:

  • Gratuity is taxable under PAYE when paid
  • Must be included in final pay calculation
  • NAPSA and NHIMA may also apply to gratuity payments
  • Employer must deduct appropriate taxes before payment
Quick Reference

Standard Rate: 25%

Payment Due: Contract end

Tax Status: Taxable

Legal Basis: Employment Code Act Section 73

Frequently Asked Questions

This depends on the circumstances. Under Section 73(2) of the Employment Code Act, if your employment is terminated "in accordance with this Code", you are entitled to prorated gratuity based on your period of service. However, if you voluntarily resign without justification, you may not be entitled to gratuity. Always check your contract terms and the specific circumstances of your departure.

No. If gratuity is specified in your employment contract, your employer is legally obligated to pay it upon contract completion. Failure to pay is a breach of contract and you can take legal action.

This depends on your employment contract. Most contracts specify gratuity based on basic pay only, but some may include allowances. Always check your contract terms or clarify with HR.

Gratuity is treated as regular income and subject to PAYE tax using normal tax bands. It's typically added to your final month's salary for tax calculation purposes. NAPSA (5%) and NHIMA (1%) may also apply depending on timing.

The most common gratuity rate is 25% of total earnings for the contract period. However, this can vary from 5% to 100% depending on your contract terms, position level, and industry. Always verify the exact percentage in your employment agreement.

Generally, gratuity should be paid as a lump sum at the end of your contract. However, if both parties agree and it's specified in the contract, it could be paid in installments. Any such arrangement should be clearly documented.