Dear Seniors, Can anybody tell me how we get 4.81% of basic salary as the rate of deduction of gratuity ???? I want the mathematical calculation ....
From India, New Delhi
6From India, New Delhi
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I just want to know how we get this formula - 4.81% of Basic for calculating the amount for gratuity deduction.....
From India, New Delhi
From India, New Delhi
The basis of 4.81% is:
Let us take an employee's basic pay as Rs. 100/-. Gratuity eligibility per year is the latest basic pay divided by 26 multiplied by 15.
Then the calculation is: 100 / 26 * 15 = 57.69231.
For one month: 57.69231 / 12 = 4.81 per month.
Balaraman - TVS, Chennai
From India, Madras
Let us take an employee's basic pay as Rs. 100/-. Gratuity eligibility per year is the latest basic pay divided by 26 multiplied by 15.
Then the calculation is: 100 / 26 * 15 = 57.69231.
For one month: 57.69231 / 12 = 4.81 per month.
Balaraman - TVS, Chennai
From India, Madras
Dear HR Fraternity / Others,
In my viewpoint, the calculation of Gratuity in CTC of an employee is an eye-wash. I don�t know which HR fellow has introduced this in his company, where ?, when ?, why ?. All these years and many of the companies where these HR fellows are following this bad precedent.
If an employee only after completing his 5th year of continuance service in a company and get relieved on resignation or superannuation will be getting this amount as Gratuity. I am a HR fellow who hates this practice. I never introduced in my company where I worked so far. For the same HR fellows the same rule applicable � if he completes the full term of 5 years only, he is going to get this benefit.
There is no use for an employee who quit the company before completion of 5 years of service. Also another benefit called Superannuation scheme � its highly unreasonable one to be included in the CTC.
K. Gopalakrishnan
ASPI - Sriperumbudur
From India, Bangalore
In my viewpoint, the calculation of Gratuity in CTC of an employee is an eye-wash. I don�t know which HR fellow has introduced this in his company, where ?, when ?, why ?. All these years and many of the companies where these HR fellows are following this bad precedent.
If an employee only after completing his 5th year of continuance service in a company and get relieved on resignation or superannuation will be getting this amount as Gratuity. I am a HR fellow who hates this practice. I never introduced in my company where I worked so far. For the same HR fellows the same rule applicable � if he completes the full term of 5 years only, he is going to get this benefit.
There is no use for an employee who quit the company before completion of 5 years of service. Also another benefit called Superannuation scheme � its highly unreasonable one to be included in the CTC.
K. Gopalakrishnan
ASPI - Sriperumbudur
From India, Bangalore
Dear HR Fraternity/others,
One more thing - whether the Company includes this Gratuity in your CTC or not - you have to be provided with the Gratuity automatically once an employee completes his 5 years of continuous service amicably and quits the company. It is not a monthly/annual coolie... it is a benefit which a company offers to its employee - for good conduct and work for continuous five years which he rendered for the company. So including 4.81% in monthly CTC and annual CTC is... something fishy. If anyone gets his offer letter - please do not hesitate to ask the Top HR fellow - what will be your take-home pay (THP), that's more important... even some fellows will include the Group Medical Insurance Policy amount which a company pays annually to the insurance company - in your CTC. Please be careful... juniors....
K. Gopalakrishnan
Sriperumbudur
From India, Bangalore
One more thing - whether the Company includes this Gratuity in your CTC or not - you have to be provided with the Gratuity automatically once an employee completes his 5 years of continuous service amicably and quits the company. It is not a monthly/annual coolie... it is a benefit which a company offers to its employee - for good conduct and work for continuous five years which he rendered for the company. So including 4.81% in monthly CTC and annual CTC is... something fishy. If anyone gets his offer letter - please do not hesitate to ask the Top HR fellow - what will be your take-home pay (THP), that's more important... even some fellows will include the Group Medical Insurance Policy amount which a company pays annually to the insurance company - in your CTC. Please be careful... juniors....
K. Gopalakrishnan
Sriperumbudur
From India, Bangalore
Dear Gopalakrishnan,
It has to be included in CTC. CTC represents the cost to the company, and gratuity coverage starts from the date of joining. The company has to contribute an annuity amount every year for all employees, whether they are 5 years more or less. As per the Gratuity Act, if anything happens to an employee's life immediately after drawing one month's salary, the surviving family members will get the full gratuity amount.
Bala, Chennai.
From India, Madras
It has to be included in CTC. CTC represents the cost to the company, and gratuity coverage starts from the date of joining. The company has to contribute an annuity amount every year for all employees, whether they are 5 years more or less. As per the Gratuity Act, if anything happens to an employee's life immediately after drawing one month's salary, the surviving family members will get the full gratuity amount.
Bala, Chennai.
From India, Madras
Dear Sir,
I would like to inquire about an interview I attended a few days ago. During the interview, the following questions were raised, so I would appreciate it if you could provide clarification.
1. If an employee is injured outside of company premises, how will the company determine the course of action promptly?
2. If an employee is not covered by ESI, will the company provide full salary during the absence period?
I kindly request your assistance in addressing these queries.
Regards,
MoolChand
From India, Delhi
I would like to inquire about an interview I attended a few days ago. During the interview, the following questions were raised, so I would appreciate it if you could provide clarification.
1. If an employee is injured outside of company premises, how will the company determine the course of action promptly?
2. If an employee is not covered by ESI, will the company provide full salary during the absence period?
I kindly request your assistance in addressing these queries.
Regards,
MoolChand
From India, Delhi
Dear Friends,
First and foremost, there cannot be any deduction of any percentage against Gratuity from an employee's salary. It is illegal and most unfair. I am of the opinion that including Gratuity in the CTC of an employee is not fair. After all, an employee becomes eligible for Gratuity ONLY after completion of 5 years' continuous employment with the Company. If the employee decides to leave the company or is asked to leave before 5 years, he/she will be deprived of this benefit.
CTC fixation calls for salary negotiations and most times the employee's current remuneration package becomes the basis for deciding the new CTC. At times, some smart candidates also include leave encashment in their current CTC with the intention of getting a better package. How do we address such a situation??
Best Wishes,
Vasant Nair
From India, Mumbai
First and foremost, there cannot be any deduction of any percentage against Gratuity from an employee's salary. It is illegal and most unfair. I am of the opinion that including Gratuity in the CTC of an employee is not fair. After all, an employee becomes eligible for Gratuity ONLY after completion of 5 years' continuous employment with the Company. If the employee decides to leave the company or is asked to leave before 5 years, he/she will be deprived of this benefit.
CTC fixation calls for salary negotiations and most times the employee's current remuneration package becomes the basis for deciding the new CTC. At times, some smart candidates also include leave encashment in their current CTC with the intention of getting a better package. How do we address such a situation??
Best Wishes,
Vasant Nair
From India, Mumbai
Calculation of gratuity percentage is not as simple as illustrated in these discussions. If the employers are showing gratuity at 4.81% and including it in the CTC, they are in a way misleading the candidate. This percentage is valid only if the person leaves the company after 5 years. If a person leaves before this period, they are not entitled to it. Determining the gratuity percentage is a separate science in itself. It is akin to how life insurance premiums are calculated. The factors that influence the gratuity contribution by the company towards its employees include:
- Salary of all the employees
- Date of birth of each employee
- Retirement age of employees
- Number of years the employee has worked in the company
These data are requested every year by the organization managing the company's gratuity fund (often LIC). Upon receiving these data, the organization calculates the amount the company should deposit in this account. In my 30 years of experience, the percentage has not exceeded 0.5% of the total basic and DA. It is important to note that there is a cap on the gratuity payable to an individual when they leave the company, hence the low percentage.
I hope I have clarified this well.
Best wishes,
V.T. Avadhany
From India, Bangalore
- Salary of all the employees
- Date of birth of each employee
- Retirement age of employees
- Number of years the employee has worked in the company
These data are requested every year by the organization managing the company's gratuity fund (often LIC). Upon receiving these data, the organization calculates the amount the company should deposit in this account. In my 30 years of experience, the percentage has not exceeded 0.5% of the total basic and DA. It is important to note that there is a cap on the gratuity payable to an individual when they leave the company, hence the low percentage.
I hope I have clarified this well.
Best wishes,
V.T. Avadhany
From India, Bangalore
Dear Mr Gopalakrishnan :
In our Group of companies which I am heading the HR functions, though we have the Gratuity in the CTC, in case of employees leaving the services of the company prior to 5 yrs services, the amount being considered for gratuity in the CTC is being paid back to the employees in his final settlement.
Also, perhaps, you may think of having the Gratutiy policy with the Insurance companies, which I am sure u may be aware of.
Rgds
Dhinakaran
From India, Hyderabad
In our Group of companies which I am heading the HR functions, though we have the Gratuity in the CTC, in case of employees leaving the services of the company prior to 5 yrs services, the amount being considered for gratuity in the CTC is being paid back to the employees in his final settlement.
Also, perhaps, you may think of having the Gratutiy policy with the Insurance companies, which I am sure u may be aware of.
Rgds
Dhinakaran
From India, Hyderabad
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