Creating pay codes for gratuity payout For an organization where the default country is India, a pay code must be created for gratuity payout. Select Administrator > Set Up > Payroll > Pay Codes. Click Create. Specify this information: Effective Date Specify the date on which the pay code is effective. Pay Code Specify the name of the Pay Code, for example, GRATUITY. Optionally, specify a description. Active Select to make this pay code active. Clear to inactivate it. Pay Summary Group Select the pay summary group. Calculation Type Select Calculate Gratuity. Click Save.