I have worked for a large organization for four years and five months, which is less than the period stipulated under the Payment of Gratuity Act, 1972. However, as per the terms of appointment, gratuity is included in my CTC as a specified amount that is not paid during the employment period. It is also stated that it is payable subject to the rules, and "rules inter alia" refers to the stipulated period of four years and 190 days.
Would this gratuity become payable as 'ex-gratia' to me even if I have not completed the stipulated period of five years since it is included in my CTC?
From India, Mumbai
Would this gratuity become payable as 'ex-gratia' to me even if I have not completed the stipulated period of five years since it is included in my CTC?
From India, Mumbai
Gratuity becomes payable if you serve 5 continuous years in the organization.
In your case, service is only 4.5 years. In my opinion, you are not entitled to gratuity, even if gratuity is included in CTC.
From India, Pune
In your case, service is only 4.5 years. In my opinion, you are not entitled to gratuity, even if gratuity is included in CTC.
From India, Pune
Thanks for the reply.
Is it not unfair and illogical to apply a 5-year period even if gratuity is part of the committed CTC and a specific amount is allocated towards the said gratuity? Also, though specified separately, it is not paid during the continuance of employment. There was no need to mention this in the compensation package as gratuity will otherwise also become payable after five years.
I received ex-gratia (instead and in place of gratuity) from my previous employer where I worked for two and a half years. There also, gratuity formed part of my CTC.
From India, Mumbai
Is it not unfair and illogical to apply a 5-year period even if gratuity is part of the committed CTC and a specific amount is allocated towards the said gratuity? Also, though specified separately, it is not paid during the continuance of employment. There was no need to mention this in the compensation package as gratuity will otherwise also become payable after five years.
I received ex-gratia (instead and in place of gratuity) from my previous employer where I worked for two and a half years. There also, gratuity formed part of my CTC.
From India, Mumbai
Mr. Shah,
Please understand CTC as applicable to any employee. Cost to company is an amount forecast by a company as a salary but is not the same as received by the employee. Gratuity legally becomes payable only after 5 years of continuous service. Ex gratia payments are those payments which have no legal compulsion while gratuity is legally mandated.
From India, Pune
Please understand CTC as applicable to any employee. Cost to company is an amount forecast by a company as a salary but is not the same as received by the employee. Gratuity legally becomes payable only after 5 years of continuous service. Ex gratia payments are those payments which have no legal compulsion while gratuity is legally mandated.
From India, Pune
The term CTC is a little confusing, and most organizations today make CTC as an offer. They include Gratuity without specifying conditions regarding Gratuity. We need to find a legal answer to this question only by moving court. This obviously cannot be claimed under the Payment of Gratuity Act. But surely this forms part of the employment contract and is governed by the Indian Contract Act.
In my opinion, if there is no condition specified like gratuity under The Payment Of Gratuity Act 1972 or payable if one completes 5 years, then one can reasonably presume that this component is payable under the Contract of Employment. No one has gone to the Court yet, and one needs to move to the Civil Court for this purpose.
From India, Chennai
In my opinion, if there is no condition specified like gratuity under The Payment Of Gratuity Act 1972 or payable if one completes 5 years, then one can reasonably presume that this component is payable under the Contract of Employment. No one has gone to the Court yet, and one needs to move to the Civil Court for this purpose.
From India, Chennai
CTC
What you see is not always what you get. Especially in the case of CTC. Basically, one needs to understand that CTC is what the company says it will spend on you; the take-home is the amount you get in hand after tax. When an employee joins a company, the company proceeds on an assumption that he will be there for a few years. Therefore, including legal payments that may arise after a few years is also included for making provision for subsequent payments, if they arise. I feel there is a need for people to read the CTC package carefully and then accept the offer if they feel satisfied.
From India, Pune
What you see is not always what you get. Especially in the case of CTC. Basically, one needs to understand that CTC is what the company says it will spend on you; the take-home is the amount you get in hand after tax. When an employee joins a company, the company proceeds on an assumption that he will be there for a few years. Therefore, including legal payments that may arise after a few years is also included for making provision for subsequent payments, if they arise. I feel there is a need for people to read the CTC package carefully and then accept the offer if they feel satisfied.
From India, Pune
Supplementing what Mr. Nathrao has mentioned above, candidates who look at the total package assume that they will get the entire amount (CTC) in some form or another. However, there are riders to it. It is like applying for a credit card. We do not read and understand the clauses and conditions incorporated. We do not ask pertinent questions and seek clarifications. If we do that, such problems do not arise. However, some components in CTC go by certain assumptions. Therefore, before signing on the dotted lines, it is better to read, understand, and get satisfied and convinced!
From India, Bengaluru
From India, Bengaluru
I would like to put up this issue in a different angle.
COST TO COMPANY is basically an internal document, detailing the workings of the organization. It covers the legal obligations and its liabilities. It provides clear ideas to both parties, i.e., the organization and the employee, and is a part of the appointment letter/contract.
Now, the question arises about the reason for leaving the service before completion of 5 years. If employment is terminated/retrenched/closed by the company, then Retrenchment compensation is required to be paid by the company to the employee. This is equivalent to the Gratuity amount, even if the services are below 5 years, which is never considered or mentioned in CTC. If an employee leaves the job on his/her own before completing 5 years of service, no Gratuity is applicable.
Hence, unless there is a specific understanding in writing, the indirect benefits/costs, even if mentioned in CTC, are payable as per the law only.
Regards,
Pramod Thakar
From India, Pune
COST TO COMPANY is basically an internal document, detailing the workings of the organization. It covers the legal obligations and its liabilities. It provides clear ideas to both parties, i.e., the organization and the employee, and is a part of the appointment letter/contract.
Now, the question arises about the reason for leaving the service before completion of 5 years. If employment is terminated/retrenched/closed by the company, then Retrenchment compensation is required to be paid by the company to the employee. This is equivalent to the Gratuity amount, even if the services are below 5 years, which is never considered or mentioned in CTC. If an employee leaves the job on his/her own before completing 5 years of service, no Gratuity is applicable.
Hence, unless there is a specific understanding in writing, the indirect benefits/costs, even if mentioned in CTC, are payable as per the law only.
Regards,
Pramod Thakar
From India, Pune
Gratuity becomes payable if you serve 5 continuous years in the organization.
I received ex-gratia (instead and in place of gratuity) from my previous employer where I worked for 4.3 years. There also gratuity formed part of my CTC.
From India, Anand
I received ex-gratia (instead and in place of gratuity) from my previous employer where I worked for 4.3 years. There also gratuity formed part of my CTC.
From India, Anand
Looking for something specific? - Join & Be Part Of Our Community and get connected with the right people who can help. Our AI-powered platform provides real-time fact-checking, peer-reviewed insights, and a vast historical knowledge base to support your search.