Dear Seniors,
I have one query regarding Payment of Gratuity. In many organizations, gratuity is included in CTC, and each month it is deducted from the salary. Now, suppose an employee leaves a company without completing 5 years of continuous service, how can the employee claim the Gratuity?
Thank you.
From India, Mumbai
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6I have one query regarding Payment of Gratuity. In many organizations, gratuity is included in CTC, and each month it is deducted from the salary. Now, suppose an employee leaves a company without completing 5 years of continuous service, how can the employee claim the Gratuity?
Thank you.
From India, Mumbai
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No claim for gratuity without completing 5 years. There is no deduction of gratuity per month; it is just a provision in the books of accounts through actuarial valuation. Gratuity element is shown in the CTC to calculate the total cost to the company of employing one person. Hence, you cannot claim gratuity without completing 5 years of service.
From India, Mumbai
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From India, Mumbai
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Hi,
It depends from company to company, and I hope you have clarity at the time of joining.
To claim gratuity as per The Payment of Gratuity Act, you must complete services for a minimum of 5 years, including leaves and holidays. However, few organizations that work for employee welfare also allow withdrawals if somebody resigns or leaves the job even before 5 years. For the same, you need to seek clarity from your HRD (We allow our employees who leave us before 5 years to claim Gratuity). If they allow, you may apply under Form I at http://pblabour.gov.in.
About deductions: Many organizations include Gratuity as part of CTC, so terming it as a deduction would be wrong. Rather, it is a component of the CTC which the organization has to accrue as per AS 16 (Accounting Standard 16) and make provisions for it. However, the organization is not liable to pay it if the employee has not completed a minimum of 5 years of service.
From India, Mumbai
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It depends from company to company, and I hope you have clarity at the time of joining.
To claim gratuity as per The Payment of Gratuity Act, you must complete services for a minimum of 5 years, including leaves and holidays. However, few organizations that work for employee welfare also allow withdrawals if somebody resigns or leaves the job even before 5 years. For the same, you need to seek clarity from your HRD (We allow our employees who leave us before 5 years to claim Gratuity). If they allow, you may apply under Form I at http://pblabour.gov.in.
About deductions: Many organizations include Gratuity as part of CTC, so terming it as a deduction would be wrong. Rather, it is a component of the CTC which the organization has to accrue as per AS 16 (Accounting Standard 16) and make provisions for it. However, the organization is not liable to pay it if the employee has not completed a minimum of 5 years of service.
From India, Mumbai
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The Gratuity Act states that gratuity is the goodwill of an employer towards an employee who has stayed with the organization for a longer period, which is typically 5 years. In the event of the employee's death or permanent total disablement, gratuity should be paid before the completion of 5 years.
Ideally, the gratuity component should not be deducted from the monthly salary. If it is deducted, the deducted amount should be refunded in cases where the employee resigns.
From India, Ahmedabad
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Ideally, the gratuity component should not be deducted from the monthly salary. If it is deducted, the deducted amount should be refunded in cases where the employee resigns.
From India, Ahmedabad
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Dear Richard Macwan,
I agree with Sh Dixon that most of the reputed companies create "Actuarial valuation of Gratuity Liability" in order to calculate the total cost to the company (CTC) for employing a particular person. However, gratuity is payable to employees only upon completion of five years, except in the case of death or disablement.
BS Kalsi
Member since Aug 2011
From India, Mumbai
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I agree with Sh Dixon that most of the reputed companies create "Actuarial valuation of Gratuity Liability" in order to calculate the total cost to the company (CTC) for employing a particular person. However, gratuity is payable to employees only upon completion of five years, except in the case of death or disablement.
BS Kalsi
Member since Aug 2011
From India, Mumbai
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Please do not get confused with CTC and Salary. CTC is the estimated Cost to the company in employing that person and includes all expenses the employer incurs or may have to incur in the future for employing an employee. If anything is shown in CTC, then that does not mean that it gets deducted from salary.
From India, Mumbai
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From India, Mumbai
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There cannot be any claims for gratuity without completing 5 years. There is also no deduction of gratuity per month; it is just a provision in the books of accounts. The amount is shown in the CTC to calculate the total cost to the company of employing one person. Hence, you cannot claim gratuity without completing 5 years of service.
In case of death, permanent disability, retirement, or retrenchment, it is different. Gratuity is usually paid.
From India, New Delhi
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In case of death, permanent disability, retirement, or retrenchment, it is different. Gratuity is usually paid.
From India, New Delhi
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If your cash in hand is being paid as promised, than no one can say that it is deducted rather it is added to count total cost to company.
From India, Delhi
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From India, Delhi
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Dear Sh Seshadri,
I would like to correct you where you have mentioned in the last sentence of your mail that "In case of death/permanent disability/retirement/redundancy, it is different. Gratuity is usually paid." I would like to invite your attention towards Section 4 of the Payment of Gratuity Act, 1972, which states that gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years: (a) on his superannuation, or (b) on his retirement or resignation, or (c) on his death or disablement due to accident or disease. Provided that the completion of continuous service of five years shall not be necessary where the termination of the employment of any employee is due to death or disablement.
The exception for putting in five years of service is only available in cases of one's death or disablement due to accident or disease and not otherwise. In the case of retirement or redundancy, a period of five years is required to claim the payment of gratuity.
BS Kalsi
Member since Aug 2011
From India, Mumbai
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I would like to correct you where you have mentioned in the last sentence of your mail that "In case of death/permanent disability/retirement/redundancy, it is different. Gratuity is usually paid." I would like to invite your attention towards Section 4 of the Payment of Gratuity Act, 1972, which states that gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years: (a) on his superannuation, or (b) on his retirement or resignation, or (c) on his death or disablement due to accident or disease. Provided that the completion of continuous service of five years shall not be necessary where the termination of the employment of any employee is due to death or disablement.
The exception for putting in five years of service is only available in cases of one's death or disablement due to accident or disease and not otherwise. In the case of retirement or redundancy, a period of five years is required to claim the payment of gratuity.
BS Kalsi
Member since Aug 2011
From India, Mumbai
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Dear all,
Good morning!
Is there any notification or judgment wherein the gratuity notification states that we cannot add the gratuity amount to CTC? If it's a part of CTC, can an employee enjoy it without completing 5 years?
Looking forward to your prompt response along with any Supreme Court judgment or gratuity notification.
Thanks & regards
From India, New Delhi
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Good morning!
Is there any notification or judgment wherein the gratuity notification states that we cannot add the gratuity amount to CTC? If it's a part of CTC, can an employee enjoy it without completing 5 years?
Looking forward to your prompt response along with any Supreme Court judgment or gratuity notification.
Thanks & regards
From India, New Delhi
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