Dear Anu,
Gratuity is considered as a part of CTC. Because every company have Yrl budgeting and planning. They take all expenses occured for each and every employment. Surplus in Budgeting is consider as saveing. If anyone resign before 5 Yrs.. that goes to Management Account and if anyone is eligible for Gratuity will goes in Employee Account.. Even Employer are Involving all these component in CTC to Increase the CTC amount so that Employee get Attraction and ACCEPT offers. Hope it is Clear that why Employer always consider Gratuity in CTC.
From India, Lucknow
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17Gratuity is considered as a part of CTC. Because every company have Yrl budgeting and planning. They take all expenses occured for each and every employment. Surplus in Budgeting is consider as saveing. If anyone resign before 5 Yrs.. that goes to Management Account and if anyone is eligible for Gratuity will goes in Employee Account.. Even Employer are Involving all these component in CTC to Increase the CTC amount so that Employee get Attraction and ACCEPT offers. Hope it is Clear that why Employer always consider Gratuity in CTC.
From India, Lucknow
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Dear All ,
CTC indicates the cost to be incurred by the company inengaging an employee and it does not indicate the gross salary to be received by the employee . So many indirect benefits are also converted in to rupee terms for calculating CTC . Hence Gratuity should also be the part of CTC . Whether the employee stays for 5 years or not, the comapny deposit the amount against gratuity i.e. the organisation incurs that cost irrespective of employee's tenure . So it is considered as a part of CTC but not a part of Gross salary . So if you are not following the concept of CTC , than do not worry .
In CTC concept , the canteen subsidy is also a part of CTC whether the employee takes food in the canteen or not . So also the case of mediclaim premium . The organisation takes the premium as a part of CTC whether the employee fals sick or not ?
I hope the things are clear .
Regards,
Jaganath
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CTC indicates the cost to be incurred by the company inengaging an employee and it does not indicate the gross salary to be received by the employee . So many indirect benefits are also converted in to rupee terms for calculating CTC . Hence Gratuity should also be the part of CTC . Whether the employee stays for 5 years or not, the comapny deposit the amount against gratuity i.e. the organisation incurs that cost irrespective of employee's tenure . So it is considered as a part of CTC but not a part of Gross salary . So if you are not following the concept of CTC , than do not worry .
In CTC concept , the canteen subsidy is also a part of CTC whether the employee takes food in the canteen or not . So also the case of mediclaim premium . The organisation takes the premium as a part of CTC whether the employee fals sick or not ?
I hope the things are clear .
Regards,
Jaganath
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(Fact Check Failed/Partial)-The reply provided is incorrect. Gratuity should not be a part of CTC as per the Payment of Gratuity Act, 1972. It is a separate benefit paid by the employer after specific conditions are met.
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Dear Anu,
1. The term CTC used by HR Executives do not have any legal sanctity of sanction. It is one of the Corporate cliche to bait the young talents by inflating the pay figures as a package by incorporating all kinds of retirement benefits, allowences as salary.
2. As you have well pointed out, Grauity being a statutory payment by the Gratuity Act,1972 is a statutory obligation of the employer to make payment as per the provisions of the Act, without collecting any contribution form the employee. In case of collection of any contribution form employer, it is illegal and i am willing to take up the case on behalf of the employee.
3. LIC Group Grauity Scheme is only to reduce the burden of the employer by pooling the risk and employee who had not completed 5 years of continuous service, do not have any claim over the employer regarding the contribution made by the employer since it works on principle of Insurance.
I appreciate the persistence of Anu and the legal acumen.
A.Irudayam
Advocate
From India, Madras
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1. The term CTC used by HR Executives do not have any legal sanctity of sanction. It is one of the Corporate cliche to bait the young talents by inflating the pay figures as a package by incorporating all kinds of retirement benefits, allowences as salary.
2. As you have well pointed out, Grauity being a statutory payment by the Gratuity Act,1972 is a statutory obligation of the employer to make payment as per the provisions of the Act, without collecting any contribution form the employee. In case of collection of any contribution form employer, it is illegal and i am willing to take up the case on behalf of the employee.
3. LIC Group Grauity Scheme is only to reduce the burden of the employer by pooling the risk and employee who had not completed 5 years of continuous service, do not have any claim over the employer regarding the contribution made by the employer since it works on principle of Insurance.
I appreciate the persistence of Anu and the legal acumen.
A.Irudayam
Advocate
From India, Madras
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(Fact Check Failed/Partial)-[B]Response[/B]: The user reply is partially correct. Gratuity should not be deducted from an employee's salary. However, the statement regarding the LIC Group Gratuity Scheme and legal action is not entirely accurate.
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Dear Mr. Irudayam,
I am in a Telecom company, as an Asst Manager, Retail Sales! my employer are also practicing the SAME THING, i.e. they are illegally deducting my Gratuity amount from my monthly salary: according to my CTC: Gratuity: 3640, and they are deducting 336 rs per month from my annual payout, will you please help me out to resolve this ongoing paradox. I am ready to consult with you professionally with all norms!
if possible pls reply to my email:
Thanks
Anthony
From India, Calcutta
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I am in a Telecom company, as an Asst Manager, Retail Sales! my employer are also practicing the SAME THING, i.e. they are illegally deducting my Gratuity amount from my monthly salary: according to my CTC: Gratuity: 3640, and they are deducting 336 rs per month from my annual payout, will you please help me out to resolve this ongoing paradox. I am ready to consult with you professionally with all norms!
if possible pls reply to my email:
Thanks
Anthony
From India, Calcutta
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(Fact Check Failed/Partial)-[response] Gratuity cannot be deducted from an employee's salary. It is a statutory benefit provided by the employer under the Payment of Gratuity Act, 1972. Deducting gratuity from an employee's salary is not legal.
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Hi malik ji
Your response is neat, but my question is , since the Gratuity is also the statutory benefit, if suppose CTC forms part of CTC , then still it is possible to trag the employer to the court , citing the reason they are cheating the employees who have not rendered 5 years of service. Your views will be more useful
Thanks
From India, Madras
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Your response is neat, but my question is , since the Gratuity is also the statutory benefit, if suppose CTC forms part of CTC , then still it is possible to trag the employer to the court , citing the reason they are cheating the employees who have not rendered 5 years of service. Your views will be more useful
Thanks
From India, Madras
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(Fact Check Failed/Partial)-The user's reply contains incorrect information regarding gratuity and CTC. Gratuity is a statutory benefit and should be included in CTC as per the Payment of Gratuity Act, 1972. Companies should not deduct gratuity monthly. It is a separate fund for employee benefits.
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Is it fair if a company roles out a CTC offer with the Gratuity component included as a part of the package and upon join revokes this Gratuity amount and lowers the CTC Amount by taking out this component??
If I have accepted the offer along with the gratuity amount included, should'nt I be compensated with this gratuity amount component under other heads as the company has revoked the gratuity clause after acceptance of my offer???
Kindly suggest ways to negotiate with my employer.
Cheers
From India, Mumbai
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If I have accepted the offer along with the gratuity amount included, should'nt I be compensated with this gratuity amount component under other heads as the company has revoked the gratuity clause after acceptance of my offer???
Kindly suggest ways to negotiate with my employer.
Cheers
From India, Mumbai
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(Fact Checked)-The company cannot revoke gratuity once included in CTC offer. If offered and accepted, it must be honored. Negotiate respectfully based on this fact. (1 Acknowledge point)
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The simple answer of this question is, put the gratuity fund aside and invests through multiple investment plan. Don’t go by LIC and other Gratuity fund scheme. This way you can always pay the amount been deducted from the salaries to the outgoing employees under Ex-Gratia or an incentive form. Yes the CTC is very common term is in existence now days.
Poonam
From India, Delhi
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Poonam
From India, Delhi
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(Fact Check Failed/Partial)-The information provided in the user reply is incorrect. Gratuity is a statutory benefit mandated by the Payment of Gratuity Act, 1972, and cannot be deducted from an employee's salary on a monthly basis. It is a lump sum payment to employees upon meeting certain conditions like completion of 5 years of service, retirement, etc. It cannot be substituted with Ex-Gratia or incentive payments.
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Dear All,
Gratuity eligibility is after 5 years of continuous service. But the matter of fact is that many good BIG organization are deducting Gratuity & even superannuation as a component in the CTC from an employee.
I have recently interview people for GM post & got to know that almost 45% candidates were having gratuity as a part of their CTC. Even candidates were from HCL Tech also. Normally the deduction made is 4.5% of Basic.
I myself couldn't understand the logic behind this because if u are deducting some specific percentage from salary, then how can an employer calculate the gratuity amount w.r.t the gratuity formula after an employee serves an organization for 5 years.
The question is also that what happens if an employee leaves before 5 years.
Request those members who are already following this practice in their cmpany to clarify this doubt.
ANU: would u plz ask the same question to ur seniors that do they pay the deducted amount to an employees if he/she leaves before the completion of 5 years & also is the contribution made by both employee & employer or is it one-sided?
Warm Regards
Sumiksha Suri
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Gratuity eligibility is after 5 years of continuous service. But the matter of fact is that many good BIG organization are deducting Gratuity & even superannuation as a component in the CTC from an employee.
I have recently interview people for GM post & got to know that almost 45% candidates were having gratuity as a part of their CTC. Even candidates were from HCL Tech also. Normally the deduction made is 4.5% of Basic.
I myself couldn't understand the logic behind this because if u are deducting some specific percentage from salary, then how can an employer calculate the gratuity amount w.r.t the gratuity formula after an employee serves an organization for 5 years.
The question is also that what happens if an employee leaves before 5 years.
Request those members who are already following this practice in their cmpany to clarify this doubt.
ANU: would u plz ask the same question to ur seniors that do they pay the deducted amount to an employees if he/she leaves before the completion of 5 years & also is the contribution made by both employee & employer or is it one-sided?
Warm Regards
Sumiksha Suri
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(Fact Check Failed/Partial)-The information provided in the user reply is [B]incorrect[/B]. According to the Payment of Gratuity Act, 1972, gratuity is a statutory benefit that employers are required to pay eligible employees upon completion of 5 years of continuous service. Deducting gratuity from an employee's monthly salary is not in line with the legal requirements. Employers calculate the gratuity amount based on a specific formula, not on a monthly deduction basis. If an employee leaves before completing 5 years, they are not entitled to gratuity unless there are exceptional circumstances as outlined in the Act.
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Dear Sumiksha,
Greetings for the day ahead!!!!
I agree with you that many big companies show gratuity, superannuation, employers contribution to PF etc. as part of the CTC. However, i disagree with this being a wrong practice.
Recruitment is a growth activity for the companies. When you recruit an employee, you expect her/him to stay in the organization and become instrumental in the development of the company. This concept however has gone for a toss , thanks to the neo capitalistic rule of "free movement of labours". At the same time , recruitment is also a cost center. How do you expect companies to make up for the cost incurred ( keeping again in mind the neo capitalistic rule of companies being a purely profit making body) !
All the overheads including gratuity can be enjoyed if you stay in the company for a definite period of time. However, employees leave in search of better opportunities and pay hikes. The practice of including such overheads in the CTC; on the one hand disincentivises the early exit of employees and on the other hand is an incentive for the people who stays with the company.
Regards
Team GroupHR
From India, Delhi
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Greetings for the day ahead!!!!
I agree with you that many big companies show gratuity, superannuation, employers contribution to PF etc. as part of the CTC. However, i disagree with this being a wrong practice.
Recruitment is a growth activity for the companies. When you recruit an employee, you expect her/him to stay in the organization and become instrumental in the development of the company. This concept however has gone for a toss , thanks to the neo capitalistic rule of "free movement of labours". At the same time , recruitment is also a cost center. How do you expect companies to make up for the cost incurred ( keeping again in mind the neo capitalistic rule of companies being a purely profit making body) !
All the overheads including gratuity can be enjoyed if you stay in the company for a definite period of time. However, employees leave in search of better opportunities and pay hikes. The practice of including such overheads in the CTC; on the one hand disincentivises the early exit of employees and on the other hand is an incentive for the people who stays with the company.
Regards
Team GroupHR
From India, Delhi
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(Fact Check Failed/Partial)-The concept of Gratuity is a statutory benefit under the Payment of Gratuity Act, 1972, not a voluntary benefit. It is not legal to deduct gratuity from an employee's salary monthly. Gratuity is payable by the employer upon the occurrence of specific events like retirement, resignation, or death after completion of five years of continuous service. Including gratuity as part of CTC is acceptable, but deducting it monthly is not in line with the law.
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But Dear Team GroupHR it is our own money , if the employee negotiates on CTC then in that case it is loss for him.
The employee does not charge the company for bearing brunts of clients on behalf of the Co. / shouting from manager, lot of problem,,,which will take time to be listed.
Personally i feel it is just unethical to retain gratuity if the employee does not complete five years i the co.
From India, Mumbai
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The employee does not charge the company for bearing brunts of clients on behalf of the Co. / shouting from manager, lot of problem,,,which will take time to be listed.
Personally i feel it is just unethical to retain gratuity if the employee does not complete five years i the co.
From India, Mumbai
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(Fact Check Failed/Partial)-[The reply provided is incorrect. Gratuity is a statutory benefit and should not be deducted from monthly salaries. It is paid by the employer as a lump sum after completing specific criteria as per the Payment of Gratuity Act, 1972. Negotiating CTC does not mean the employee loses out on entitled benefits. Retaining gratuity if an employee does not complete five years is against the law.]
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(Fact Check Failed/Partial)-Gratuity is not deducted monthly; it's a lump sum payment after 5 years. It's a statutory benefit, not part of CTC. Correct resolution provided.