Dear Mr. A. Thakare & Mr. Dhingra
Once an appointment letter on CTC basis is accepted by the candidate and he joins the company it is a contract, enforceable by law. (Contract Act). Further performance pay depends on a formula then it is difficult for management to manipulate it, but where it is indicative, it can be subjective. Gratuaity calculation included in CTC is not subjective but is capable of being calculated. All I say is if the CTC includes gratuity and employee leaves in less than 5 years, then employer should compensate him with suitable amount for loss of gratuity included in CTC. If he does not it will be dishonest or unethical.
Filing suit or not is the choice of the employee; considering time taken & expensive, his weakness vis-a-vis fighting a stronger opponent. .....Regards - A S Bhat
From India, Pune
51Once an appointment letter on CTC basis is accepted by the candidate and he joins the company it is a contract, enforceable by law. (Contract Act). Further performance pay depends on a formula then it is difficult for management to manipulate it, but where it is indicative, it can be subjective. Gratuaity calculation included in CTC is not subjective but is capable of being calculated. All I say is if the CTC includes gratuity and employee leaves in less than 5 years, then employer should compensate him with suitable amount for loss of gratuity included in CTC. If he does not it will be dishonest or unethical.
Filing suit or not is the choice of the employee; considering time taken & expensive, his weakness vis-a-vis fighting a stronger opponent. .....Regards - A S Bhat
From India, Pune
Further if the employer has included a cost (in this case gratuity) in one’s appointment letter by way of CTC, he might as well incur instead of taking advantage of gratuity act - A S Bhat
From India, Pune
From India, Pune
Dear Mr Dhingra Sir: It is true that no section in the Act requiring the employer to pay the Gratuity to his employees for the service rendered by them less than 5 years. Such brainstorming session on the CTC aspect would be a healthy discussion in this network among the legal experts like you. Hence such idea of mine is posted for discussion. Further more when this matter is come to the attention of court of law, I feel, the court may take a cognizance of this issue for arriving at a solution.
From India, Mumbai
From India, Mumbai
Dear All,
I disagree with that the employers take benefit of the act and do not pay gratuity. Also there is noting unethical or dishonest in that.
Having the same put in the CTC is mere a clear way of showing that the employer is investing for the employee, so that if he stays for more then 5 years, not only the employer but the employee can also enjoy the fruits of having stayed with the company for a long term. Paying gratuity after 5 years is so that both the parties have had a win-win situation.
Saying that the payment is to be given, we are accepting, that the relationship of employee and employer is only legal and for a very very short period.
Regards,
Ashutosh Thakre
From India, Mumbai
I disagree with that the employers take benefit of the act and do not pay gratuity. Also there is noting unethical or dishonest in that.
Having the same put in the CTC is mere a clear way of showing that the employer is investing for the employee, so that if he stays for more then 5 years, not only the employer but the employee can also enjoy the fruits of having stayed with the company for a long term. Paying gratuity after 5 years is so that both the parties have had a win-win situation.
Saying that the payment is to be given, we are accepting, that the relationship of employee and employer is only legal and for a very very short period.
Regards,
Ashutosh Thakre
From India, Mumbai
Dear Mr. Dhingra,
"As I know, Annual CTC is not a legal term. It is designed by the companies to attract & allure the new joinees. Therefore, company go on adding any type of expenditure like gratuity which is tenable on separation after 5 years of continuous service. At the start of the job, no tenure of separation can be decided. Hence, how can we say this is expenditure or accrued expenditure."
In the above lines/concept, I nowhere mentioned that this is illegal concept but I wish to say that this is not legislated concept but designed by the companies and accordingly concept is not homogeneous in all companies.
Dear Mr. Thakre,
I refer to your latest post. I wish to point out that if an employee renders service for more than 5 years and gratuity is not mentioned in CTC, then his employer will not pay him gratuity?
From India, Panipat
"As I know, Annual CTC is not a legal term. It is designed by the companies to attract & allure the new joinees. Therefore, company go on adding any type of expenditure like gratuity which is tenable on separation after 5 years of continuous service. At the start of the job, no tenure of separation can be decided. Hence, how can we say this is expenditure or accrued expenditure."
In the above lines/concept, I nowhere mentioned that this is illegal concept but I wish to say that this is not legislated concept but designed by the companies and accordingly concept is not homogeneous in all companies.
Dear Mr. Thakre,
I refer to your latest post. I wish to point out that if an employee renders service for more than 5 years and gratuity is not mentioned in CTC, then his employer will not pay him gratuity?
From India, Panipat
Dear Mr. Gupta,
Thank You for making that point. Its the other side of the coin, so if the employee completes 5 years and leaves the company, then can you say that the employee is taking benefit of the act for monetary gains. Like wise, why has the employer to always take a blame that he is unethical for non payment.
So if it is mandatory for the employer to pay, even if it is not in the CTC, as legally said, then where it is legally said that we need to pay it before completion of the said period.
So, my point, if the employee can hide behind the law, what's wrong if the employer does it.
Regards,
Ashutosh Thakre
From India, Mumbai
Thank You for making that point. Its the other side of the coin, so if the employee completes 5 years and leaves the company, then can you say that the employee is taking benefit of the act for monetary gains. Like wise, why has the employer to always take a blame that he is unethical for non payment.
So if it is mandatory for the employer to pay, even if it is not in the CTC, as legally said, then where it is legally said that we need to pay it before completion of the said period.
So, my point, if the employee can hide behind the law, what's wrong if the employer does it.
Regards,
Ashutosh Thakre
From India, Mumbai
Dear Mr. Thakre,
You will agree to my point that Appointment Letter with CTC is enforceable under Civil Laws for all employees(For 'WORKMAN' civil laws and ID Act, both option). Thus all terms & Conditions of Appointment Letter including CTC including gratuity can be enforced through Civil Laws. Under Civil Laws there are no terms & conditions for gratuity payment rather can be enforced as per Appointment Letter and PGA can not be enforced through civil laws.
Gratuity payment can also be implemented through PGA which in itself is a complete code.
In my opinion, this way while mentioning Gratuity Payment in CTC, we are putting ourselves under two legislation.
Kindly opine.
Thanks,
V K Gupta
From India, Panipat
You will agree to my point that Appointment Letter with CTC is enforceable under Civil Laws for all employees(For 'WORKMAN' civil laws and ID Act, both option). Thus all terms & Conditions of Appointment Letter including CTC including gratuity can be enforced through Civil Laws. Under Civil Laws there are no terms & conditions for gratuity payment rather can be enforced as per Appointment Letter and PGA can not be enforced through civil laws.
Gratuity payment can also be implemented through PGA which in itself is a complete code.
In my opinion, this way while mentioning Gratuity Payment in CTC, we are putting ourselves under two legislation.
Kindly opine.
Thanks,
V K Gupta
From India, Panipat
Dear Mr. Gupta,
Point taken. Can you share the cases where the Gratuity was payable to the employee, under the Civil Law, even before completion of 5 years. This will make the point proven and conclusive.
Regards,
Ashutosh Thakre
From India, Mumbai
Point taken. Can you share the cases where the Gratuity was payable to the employee, under the Civil Law, even before completion of 5 years. This will make the point proven and conclusive.
Regards,
Ashutosh Thakre
From India, Mumbai
As CTC Means it is total cost incurred by the company to hire a employee, so Gratuity is also a part of this means it is a cost incurred by the employer on behalf of employeee. so it can be included in CTC
From India, undefined
From India, undefined
Dear Shri Bhat,
Compensation and gratuity are two different terms. Law recognizes gratuity under the Payment of Gratuity Act payable under the prescribed conditions. The Payment of Gratuity Act, does not recognize payment of any type of compensation, if included in CTC and shown in the offer/ appointment letter in the name of gratuity. However, the employee is free to move the court of law to recover any other type of compensation under the Contract Act, if he desires so, but not in the name of the gratuity. However that depends solely on convincing of the judge, if he agrees to get the employee paid in the name of compensation in some other name in lieu of the elements of gratuity included in the CTC. But still, even in that event, he should also be ready to face trials on appeals in higher courts by the employer. In that case, the employee would be much more on disadvantage due to trial costs, rather than receipt of element of gratuity in terms of CTC.
So, we have to see the practical aspects, not the theortical aspects, as it cannot be taken as a case of debate on administrative or management aspect, but on the implications of law and pros & cons of employee's fight for the claim of gratuity part of the CTC. Rest depends upon the wisdom of individual to individual.
From India, Delhi
Compensation and gratuity are two different terms. Law recognizes gratuity under the Payment of Gratuity Act payable under the prescribed conditions. The Payment of Gratuity Act, does not recognize payment of any type of compensation, if included in CTC and shown in the offer/ appointment letter in the name of gratuity. However, the employee is free to move the court of law to recover any other type of compensation under the Contract Act, if he desires so, but not in the name of the gratuity. However that depends solely on convincing of the judge, if he agrees to get the employee paid in the name of compensation in some other name in lieu of the elements of gratuity included in the CTC. But still, even in that event, he should also be ready to face trials on appeals in higher courts by the employer. In that case, the employee would be much more on disadvantage due to trial costs, rather than receipt of element of gratuity in terms of CTC.
So, we have to see the practical aspects, not the theortical aspects, as it cannot be taken as a case of debate on administrative or management aspect, but on the implications of law and pros & cons of employee's fight for the claim of gratuity part of the CTC. Rest depends upon the wisdom of individual to individual.
From India, Delhi
Community Support and Knowledge-base on business, career and organisational prospects and issues - Register and Log In to CiteHR and post your query, download formats and be part of a fostered community of professionals.
FORM-F-NOMINATI ON OF GRATUITY.pdf
Gratuity Form I.doc