Payout on retrenchment/layoff. The Severance Pay Calculator takes monthly salary (basic + da or average wage), completed years of service, days of pay per year of service, notice pay (months) and returns total payout plus severance (retrenchment compensation), notice pay. Results update as you type, and the formula is shown under the result so you can repeat it in your own spreadsheet.
Payroll figures should follow the rules in your contracts and local law. Where a rule differs between states or countries, adjust the inputs; the calculator shows its assumptions so you can check them against your own policy. Use the worked example below to check the maths against your own figures.
How the Severance Pay Calculator works
Indian law sets retrenchment compensation at 15 days' average pay per completed year of service plus notice pay (or pay in lieu). Other countries use different multiples; change the days-per-year figure to match your jurisdiction or contract.
Worked example
With the example values (monthly salary (basic + da or average wage) of $40,000, completed years of service of 6, days of pay per year of service of 15, notice pay (months) of 1), the total payout is $178,461.54; severance (retrenchment compensation) $138,461.54, notice pay $40,000.00. Change any figure above and the result updates immediately; use Copy results to paste the summary into a note or email.
Assumptions and limits: Based on the Industrial Disputes Act formula of 15 days per completed year; company policies and other countries differ.
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Frequently Asked Questions
How is total payout calculated?
severance = monthly salary ÷ 26 × days per year × years of service; total = severance + notice pay.
Which figures do I need?
Monthly salary (basic + da or average wage), completed years of service, days of pay per year of service, notice pay (months). Take them from the same period and the same set of accounts or reports so the ratio is consistent, and check the example values as a guide to the units expected.
Do the rules differ by location?
Yes. Statutory rates, ceilings and eligibility conditions vary by country and often by state. Adjust the inputs to your jurisdiction and confirm with your payroll provider or labour law adviser.
What assumptions does this calculator make?
Based on the Industrial Disputes Act formula of 15 days per completed year; company policies and other countries differ.
