Dear Ashish and all responders,
As Mr. Madan Mohan Praj says, it is such a horrible state of the HR function. After seeing the questions and responses, I too felt so. Please find below my clear inputs on Gratuity. Hope this will put an end to basic questions on Gratuity.
1. Gratuity is payable on completion of 5 years of service.
2. Service counts from day one when the person is taken on regular employment, which includes the probationary period (training should not be confused for probation - Training is an engagement by a company where the person is given an offer letter as a Trainee, which will be for a fixed period or may be extended after completion of that fixed period).
3. The Gratuity formula is - basic + DA x number of years of service x 15 / 26, where 15 represents the 15 days of basic + DA payable for every completed year of service.
4. While calculating gratuity, service of 6 months and more should be treated as one year.
5. Payment of Gratuity is done within one month after leaving the company in case of resignations, VRS, etc., and in case of retirement, it is a normal practice in organizations to pay it on the last day when the person retires.
6. Gratuity cannot be withheld unless there is any damage to the property or such reasons that the management should be able to convince the Gratuity Authority in case it becomes an issue.
7. Late payments will attract 15% (latest amendments, if any to be checked) interest per annum, and the eligible person will be at liberty to take it to the Gratuity authority if managements do not comply.
K. Ramachandra
Manager-Admin & HR
Tokai Rubber Auto-Parts - Bangalore
9As Mr. Madan Mohan Praj says, it is such a horrible state of the HR function. After seeing the questions and responses, I too felt so. Please find below my clear inputs on Gratuity. Hope this will put an end to basic questions on Gratuity.
1. Gratuity is payable on completion of 5 years of service.
2. Service counts from day one when the person is taken on regular employment, which includes the probationary period (training should not be confused for probation - Training is an engagement by a company where the person is given an offer letter as a Trainee, which will be for a fixed period or may be extended after completion of that fixed period).
3. The Gratuity formula is - basic + DA x number of years of service x 15 / 26, where 15 represents the 15 days of basic + DA payable for every completed year of service.
4. While calculating gratuity, service of 6 months and more should be treated as one year.
5. Payment of Gratuity is done within one month after leaving the company in case of resignations, VRS, etc., and in case of retirement, it is a normal practice in organizations to pay it on the last day when the person retires.
6. Gratuity cannot be withheld unless there is any damage to the property or such reasons that the management should be able to convince the Gratuity Authority in case it becomes an issue.
7. Late payments will attract 15% (latest amendments, if any to be checked) interest per annum, and the eligible person will be at liberty to take it to the Gratuity authority if managements do not comply.
K. Ramachandra
Manager-Admin & HR
Tokai Rubber Auto-Parts - Bangalore
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