Hi,
I agree with Shri K. Ramachandra of Bangalore. As per Gratuiity Act, if an employee completes five years of service in an organisation, he automatically become eligible for payment of Gratuity under the Act. One more feature is there that it is not necessary that an employee has to request for payment of gratuity from his ex-employer. If company received any request letter from such ex-employee, the amount of gratuity is to be paid to him within one month from the date of his resignation otherwise, if the ex-employee goes to court for payment of gratuity, company will be in trouble. Secondly, if the resigned employee does not make any formal request for payment of gratuity, even then the company has to make the payment of gratuity within one month from the date of his resignation. In case, if company does not have any address of the ex-employee, the amount of gratuity is to be deposited to the concerned government authority.
Regards.
From India, Mumbai
15I agree with Shri K. Ramachandra of Bangalore. As per Gratuiity Act, if an employee completes five years of service in an organisation, he automatically become eligible for payment of Gratuity under the Act. One more feature is there that it is not necessary that an employee has to request for payment of gratuity from his ex-employer. If company received any request letter from such ex-employee, the amount of gratuity is to be paid to him within one month from the date of his resignation otherwise, if the ex-employee goes to court for payment of gratuity, company will be in trouble. Secondly, if the resigned employee does not make any formal request for payment of gratuity, even then the company has to make the payment of gratuity within one month from the date of his resignation. In case, if company does not have any address of the ex-employee, the amount of gratuity is to be deposited to the concerned government authority.
Regards.
From India, Mumbai
Scenario - Employee has worked for 4 years on India Payroll and then resigned as per business requirement and joined the parent company in UK payroll for a period of 2 years on contract, and after the completion of contract the employee joins back on the India Payroll.
Questions:-
1. Will he need to work for 5 years to be eilgible to get the gratuity or for 1 year.
2. Can the employees experience letter be combined for India, UK and then again India experience.
3. If the employee is required to join the parent company in other country due to business requirement, then their gratuity should not be stopped.
From India, Gurgaon
Questions:-
1. Will he need to work for 5 years to be eilgible to get the gratuity or for 1 year.
2. Can the employees experience letter be combined for India, UK and then again India experience.
3. If the employee is required to join the parent company in other country due to business requirement, then their gratuity should not be stopped.
From India, Gurgaon
Dear Balaji,
The reason why company's show Gratuity as CTC is to have provisions for payment of Gratuity in the event the employee quits the organisation. But it does not mean that just because Gratuity is shown in CTC you need to pay Gratuity even if the employee has not completed 5 year of service.
I trust you are aware that LIC has a Group Gratuity Scheme wherein LIC sends you an actuarial valuation every based on the salary (Basic + DA) details provided by you. Based on this valuation LIC requests you to contribute towards the company's Group Gratuity Scheme. Here, the company actually pays the amount to LIC and LIC in turn follows the Gratuity rules when they make payments to the employee to the extent fund is available (paid by the employer). This fund also earns interest as declared by LIC from time to time.
But the best feature here is if you cover all your employees with a marginal risk premium LIC pays Gratuity till the date of his superannuation even if the employee dies while in service without actually reaching the age of super annuation. In other words if the employee dies when he is 50 years after rendering 10 years of service in the organisation, LIC will pay till his superannuation say 58 years i.e 10 years + 8 years = 18 years of service will be paid by LIC, whereas, as employer we will actually be paying only for 10 years in such a case.
So the Gratuity act is an independant act and should not be linked with your CTC document. You don't really need any court ruling for this.
M.V.KANNAN
From India, Madras
The reason why company's show Gratuity as CTC is to have provisions for payment of Gratuity in the event the employee quits the organisation. But it does not mean that just because Gratuity is shown in CTC you need to pay Gratuity even if the employee has not completed 5 year of service.
I trust you are aware that LIC has a Group Gratuity Scheme wherein LIC sends you an actuarial valuation every based on the salary (Basic + DA) details provided by you. Based on this valuation LIC requests you to contribute towards the company's Group Gratuity Scheme. Here, the company actually pays the amount to LIC and LIC in turn follows the Gratuity rules when they make payments to the employee to the extent fund is available (paid by the employer). This fund also earns interest as declared by LIC from time to time.
But the best feature here is if you cover all your employees with a marginal risk premium LIC pays Gratuity till the date of his superannuation even if the employee dies while in service without actually reaching the age of super annuation. In other words if the employee dies when he is 50 years after rendering 10 years of service in the organisation, LIC will pay till his superannuation say 58 years i.e 10 years + 8 years = 18 years of service will be paid by LIC, whereas, as employer we will actually be paying only for 10 years in such a case.
So the Gratuity act is an independant act and should not be linked with your CTC document. You don't really need any court ruling for this.
M.V.KANNAN
From India, Madras
Dear Jenitha,
Gratuity calculation must be common to all employees. (Basic + DA) /26 X 15 days X Nr. of years of service or part thereof in excess of 6 months.
However, if the employer is willing the number of days can be improved beyond 15 days wages. But if so decided it must be uniform for all employees and you can't have discrimination amongst them.
Beware!!, once you declare such a policy you cannot go back on it at any point of time. Because every act states that if the employer promotes a scheme that is better than the act the employer has to continue with it.
M.V.KANNAN
From India, Madras
Gratuity calculation must be common to all employees. (Basic + DA) /26 X 15 days X Nr. of years of service or part thereof in excess of 6 months.
However, if the employer is willing the number of days can be improved beyond 15 days wages. But if so decided it must be uniform for all employees and you can't have discrimination amongst them.
Beware!!, once you declare such a policy you cannot go back on it at any point of time. Because every act states that if the employer promotes a scheme that is better than the act the employer has to continue with it.
M.V.KANNAN
From India, Madras
Dear Venky,
The answers lie very much in your question itself.
He has worked for 4 years and resigned. On last day of working you will work out the Full and Final Settlement worksheet which will also include his Gratuity eligibility if any. So if he has quit after working for 4 years he will not be eligible for Gratuity.
In the second case he served for 2 years abroard and rejoins in India. He is a new employee according to you, as he has resigned.
For example let us look at a different case.
An employee has worked in your company for 4 years and for some reason quit. He worked for some other company for 2 years and wishes to rejoin your company and your company also selects him for re - entry. In such a case when he left your organisation he would not have received Gratuity. Upon his rejoining he is treated as if he has joined on that day (new employee)
Moreover, please note that all other Statutory dealings PF etc will automatically be severed once he has quit but he has the option to continue with the same PF number, but the intervening period of 2 years will be considered as break in service as per PF. But please note that because he has been permitted to continue his PF membership, it does not mean that the employer has to take cognisance of the past employment of 4 years as service rendered by him for Gratuity act.
As regards experience certificate please issue seperate experience certificates (if he has worked abroad) for the same company and do not combine the experience at different locations, though it is the same company. This will be applicable if he has been asked to resign at each location. This advise is to save you from the claim of continuous service. But if he has been transferred to different locations within India then the experience certificate will include service at different locations.
Regarding the third question, all the terms and conditions he accepts at the time of his joining at different locations will be binding on him as the rules and regulations of the respective country will be applicable to the employer, it is irrespective of the nationality of the employee. For example several Multinational companies have foreigners on Indian rolls and the acts applicable in India will only apply to them and we will not be able to adopt Statutory provisions of the respective countries as some acts will be far superior in terms of monetary benefits.
Trust matter is clear
Regards
M.V.KANNAN
From India, Madras
The answers lie very much in your question itself.
He has worked for 4 years and resigned. On last day of working you will work out the Full and Final Settlement worksheet which will also include his Gratuity eligibility if any. So if he has quit after working for 4 years he will not be eligible for Gratuity.
In the second case he served for 2 years abroard and rejoins in India. He is a new employee according to you, as he has resigned.
For example let us look at a different case.
An employee has worked in your company for 4 years and for some reason quit. He worked for some other company for 2 years and wishes to rejoin your company and your company also selects him for re - entry. In such a case when he left your organisation he would not have received Gratuity. Upon his rejoining he is treated as if he has joined on that day (new employee)
Moreover, please note that all other Statutory dealings PF etc will automatically be severed once he has quit but he has the option to continue with the same PF number, but the intervening period of 2 years will be considered as break in service as per PF. But please note that because he has been permitted to continue his PF membership, it does not mean that the employer has to take cognisance of the past employment of 4 years as service rendered by him for Gratuity act.
As regards experience certificate please issue seperate experience certificates (if he has worked abroad) for the same company and do not combine the experience at different locations, though it is the same company. This will be applicable if he has been asked to resign at each location. This advise is to save you from the claim of continuous service. But if he has been transferred to different locations within India then the experience certificate will include service at different locations.
Regarding the third question, all the terms and conditions he accepts at the time of his joining at different locations will be binding on him as the rules and regulations of the respective country will be applicable to the employer, it is irrespective of the nationality of the employee. For example several Multinational companies have foreigners on Indian rolls and the acts applicable in India will only apply to them and we will not be able to adopt Statutory provisions of the respective countries as some acts will be far superior in terms of monetary benefits.
Trust matter is clear
Regards
M.V.KANNAN
From India, Madras
You cannot have Company Rules that are violative of Laws. In the present context you are bound to pay Gratuity to employees if they are entitled for the same as per the Payment of Gratuity Act.
Location has no relevance insofar as entitlement for and payment of Gratuity is concerned.
In the present case you will have to pay to the employee 12 years' Gratuity.
Since you have asked, let me tell you that your Company Rules are not legally tenable.
Vasant Nair
From India, Mumbai
Location has no relevance insofar as entitlement for and payment of Gratuity is concerned.
In the present case you will have to pay to the employee 12 years' Gratuity.
Since you have asked, let me tell you that your Company Rules are not legally tenable.
Vasant Nair
From India, Mumbai
Thanks for your input, Mr. Dhar.
I think large IT companies prefer to add to their bottom line than to invest in a legal dept. or have a good HR deptt. The whole thread speaks about how legal compliance has lost its effectiveness as a deterrent and the labour laws lacking teeths. It seems any company can come up with anything and call it anything - creativity, you see!
Warm regards.
From India, Delhi
I think large IT companies prefer to add to their bottom line than to invest in a legal dept. or have a good HR deptt. The whole thread speaks about how legal compliance has lost its effectiveness as a deterrent and the labour laws lacking teeths. It seems any company can come up with anything and call it anything - creativity, you see!
Warm regards.
From India, Delhi
Dear all,
i want to now participate..
Gratuity is social service to any employee. its define by central govt. as THE GRATUITY ACT - 1972.
Its applicable to all Factory, Education Institute etc who are registered under any government office.
Thanks.
From India, Ahmadabad
i want to now participate..
Gratuity is social service to any employee. its define by central govt. as THE GRATUITY ACT - 1972.
Its applicable to all Factory, Education Institute etc who are registered under any government office.
Thanks.
From India, Ahmadabad
Gratuity is a matter of right of an employee as provided by statute.
The main eligibility criterion are as under:
Gratuity Eligibility Criteria: Gratuity shall be payable to an employee on termination of his employment after he has rendered continuous service for not less than 5 years. Thus for an employee to become entitled for the payment of gratuity, he must have rendered continuous service of at least 5 years. The completion of continuous service of 5 years is not necessary where the termination of the employment of an employee is due to his death or disablement.
Wages for calculation: Gratuity is calculated at the rate of 15 days’ wages for every completed year as if the month comprises of 26 days at the last drawn wages.
Calculation for piece rated employee: At the rate of 15 days’ wages for every completed year on an average of 3 months wages
Calculation for seasonal employee: At the rate of 7 days’ wages for every completed year of service.
Employee: means any person (other than an apprentice) employed on wages, in any establishment, factory, mine, oilfield, plantation, port, railway company or shop, to do any skilled, semi-skilled, or unskilled, manual, supervisory, technical or clerical work, whether the terms of such employment are express or implied, and whether or not such person is employed in a managerial or administrative capacity, but does not include any such person who holds a post under the Central Government or a State Government and is governed by any other Act or by any rules providing for payment of gratuity. All employees irrespective of status or salary.
Wages: means all emoluments which are earned by an employee while on duty or on leave in accordance with the terms and conditions of his employment and which are paid or are payable to him in cash and includes dearness allowance but does not include any bonus, commission, house rent allowance, overtime wages and any other allowance.
From India, Chandigarh
The main eligibility criterion are as under:
Gratuity Eligibility Criteria: Gratuity shall be payable to an employee on termination of his employment after he has rendered continuous service for not less than 5 years. Thus for an employee to become entitled for the payment of gratuity, he must have rendered continuous service of at least 5 years. The completion of continuous service of 5 years is not necessary where the termination of the employment of an employee is due to his death or disablement.
Wages for calculation: Gratuity is calculated at the rate of 15 days’ wages for every completed year as if the month comprises of 26 days at the last drawn wages.
Calculation for piece rated employee: At the rate of 15 days’ wages for every completed year on an average of 3 months wages
Calculation for seasonal employee: At the rate of 7 days’ wages for every completed year of service.
Employee: means any person (other than an apprentice) employed on wages, in any establishment, factory, mine, oilfield, plantation, port, railway company or shop, to do any skilled, semi-skilled, or unskilled, manual, supervisory, technical or clerical work, whether the terms of such employment are express or implied, and whether or not such person is employed in a managerial or administrative capacity, but does not include any such person who holds a post under the Central Government or a State Government and is governed by any other Act or by any rules providing for payment of gratuity. All employees irrespective of status or salary.
Wages: means all emoluments which are earned by an employee while on duty or on leave in accordance with the terms and conditions of his employment and which are paid or are payable to him in cash and includes dearness allowance but does not include any bonus, commission, house rent allowance, overtime wages and any other allowance.
From India, Chandigarh
Dear friend,
The questions we should look into are :-
1) Whether his appointment is by the Indian company ?
2) Whether the employee is still on the rolls of Indian company ?
If the answer is "Yes", he is eligible for gratuity for the whole period as per the Gr act.
Further to this, if his service was transferred by Indian company to Foreign company on a mutual consent/ by his option or by an order by the employer on administrative /or other reasons of your company even after severing his service with Indian company, he is eligible to get gratuity for his Indian service, if not spelled anything regarding on his gratuity eligibility, as per the order/contract for his foreign assignment. ie; total service less 18 months.
TM
From India, Calicut
The questions we should look into are :-
1) Whether his appointment is by the Indian company ?
2) Whether the employee is still on the rolls of Indian company ?
If the answer is "Yes", he is eligible for gratuity for the whole period as per the Gr act.
Further to this, if his service was transferred by Indian company to Foreign company on a mutual consent/ by his option or by an order by the employer on administrative /or other reasons of your company even after severing his service with Indian company, he is eligible to get gratuity for his Indian service, if not spelled anything regarding on his gratuity eligibility, as per the order/contract for his foreign assignment. ie; total service less 18 months.
TM
From India, Calicut
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Form-F--Notice for Payment of Gratuity Act-Rule 8..pdf
Payment of Gratuity Act, 1972 & The Rules.ppt
THE PAYMENT OF GRATUITY ACT 1972.doc