Dear Shri Sridharan,
No court other than the Supreme Court has the power to struck down any section of law. That too at least they will not strike down any section of the Payment of Gratuity Act. They at the most can declare the term CTC as void. Even then, the Government of India, being part of the Exectutive, will have to float some Amendment Act to comply with the judgment of the SC to amend the law. But, still the law breakers with be free to device any such other term to sageguard their skins from the clutches of law.
So, ultimately it is only the employee, who will remain at the receiving end in the struggle between the employees and management, may be via the Judiciary or the Executive.
From India, Delhi
387No court other than the Supreme Court has the power to struck down any section of law. That too at least they will not strike down any section of the Payment of Gratuity Act. They at the most can declare the term CTC as void. Even then, the Government of India, being part of the Exectutive, will have to float some Amendment Act to comply with the judgment of the SC to amend the law. But, still the law breakers with be free to device any such other term to sageguard their skins from the clutches of law.
So, ultimately it is only the employee, who will remain at the receiving end in the struggle between the employees and management, may be via the Judiciary or the Executive.
From India, Delhi
Dear Shri Gupta,
Every bit is not legislated. Whatever is not restricted under any law, that has to be taken in positive sense, unless that effect is negated by introduction of some new legislation. Even the courts, unless their is any legal embargo by any nature of legislation, do not accept the assumptions or presumptions, as part of law.
I have already stated, CTC is the Accounting term for the purpose of accounting any cost to the company, not the HR term in any way.
From India, Delhi
Every bit is not legislated. Whatever is not restricted under any law, that has to be taken in positive sense, unless that effect is negated by introduction of some new legislation. Even the courts, unless their is any legal embargo by any nature of legislation, do not accept the assumptions or presumptions, as part of law.
I have already stated, CTC is the Accounting term for the purpose of accounting any cost to the company, not the HR term in any way.
From India, Delhi
Mr. Thakre, and Mr Dhingra,
I have made my points and you have made yours. Let us agree to disagree. But one thing Mr. Thakre stated something with which I do not agree. (Employer has invested in the employee etc.) With this I sign off from this discussion.
Does the employee not make similar sacrifices giving secondary priority to his family and friends? Does he not work more than 8 mandatory hours even at the drop of a hat? These days I find people even in public sector like insurance, banks etc. where employees have to put in a lot more work than what is expected of him against all odds...
A S Bhat
From India, Pune
I have made my points and you have made yours. Let us agree to disagree. But one thing Mr. Thakre stated something with which I do not agree. (Employer has invested in the employee etc.) With this I sign off from this discussion.
Does the employee not make similar sacrifices giving secondary priority to his family and friends? Does he not work more than 8 mandatory hours even at the drop of a hat? These days I find people even in public sector like insurance, banks etc. where employees have to put in a lot more work than what is expected of him against all odds...
A S Bhat
From India, Pune
Let me put it this way, will an employee has the right to claim gratuity at the time of leaving even if he would have only <5yrs service if the gratuity is part of his CTC as per the apptt. letter if this letter is silent about the Gratuity Act and conditions imposed unde the Act ?
From India, Bangalore
From India, Bangalore
Dear Shri Bhat,
Your point of opinion is OK, but so far the legal implication is concerned, the HR has to act within the legal framework with respect to labour and service laws to maintain employer-employee relations. Unless any issue is specifically included in the law books, the opinion, if felt to be rational need the stamp of the competent court of law through legal trial, as interpretation of law rests with the competent court only, not with the executive. The term CTC is yet to appear in any labour/ service law.
From India, Delhi
Your point of opinion is OK, but so far the legal implication is concerned, the HR has to act within the legal framework with respect to labour and service laws to maintain employer-employee relations. Unless any issue is specifically included in the law books, the opinion, if felt to be rational need the stamp of the competent court of law through legal trial, as interpretation of law rests with the competent court only, not with the executive. The term CTC is yet to appear in any labour/ service law.
From India, Delhi
Let’s understand this from the perspective of “Books of Accounts”.
There are TWO employees – Ramesh and Suresh.
Suresh worked with X company for THREE years. His Basic Salary during SIX years was as follows [there was no DA or Retention Allowance]: 20,000/- INR; 24,000/- INR; and 26,000/- INR. Company X has deducted 11,538/- INR; 13,846/- INR; and 15,000/- INR respectively from his CTC and kept aside (15/26*Basic). Because Suresh has resigned after THREE years, as per rules he is not entitled for Gratuity. So, what will happen to the amount of 40,385/- INR which has been deducted from his CTC in last three years? Will they show this amount as profit?
Ramesh worked with X company for SIX Years. His Basic Salary during SIX years was as follows [there was no DA or Retention Allowance]: 12,000/- INR; 15,000/- INR; 18,000/- INR; 20,000/- INR; 24,000/- INR; and 26,000/- INR. Since the gratuity has been included as a part of CTC, therefore, every year Company X has deducted 6,923/- INR; 8,654/- INR; 10,385/- INR; 11,538/- INR ; 13,846/- INR; and 15,000/- INR respectively from his CTC and kept aside (15/26*Basic). However, when Ramesh resigned after the completion of SIX years, the Company should pay him 90,000/- INR (15/26*Basic*6) instead of 66,346/- INR [6,923 + 8,654 + 10,385 + 11,538 +13,846 + 15,000/-], how will they show 23,654/- INR [90,000 – 66,346]. Will they show it as loss?
Regards,
Sanjeev
From India, Mumbai
There are TWO employees – Ramesh and Suresh.
Suresh worked with X company for THREE years. His Basic Salary during SIX years was as follows [there was no DA or Retention Allowance]: 20,000/- INR; 24,000/- INR; and 26,000/- INR. Company X has deducted 11,538/- INR; 13,846/- INR; and 15,000/- INR respectively from his CTC and kept aside (15/26*Basic). Because Suresh has resigned after THREE years, as per rules he is not entitled for Gratuity. So, what will happen to the amount of 40,385/- INR which has been deducted from his CTC in last three years? Will they show this amount as profit?
Ramesh worked with X company for SIX Years. His Basic Salary during SIX years was as follows [there was no DA or Retention Allowance]: 12,000/- INR; 15,000/- INR; 18,000/- INR; 20,000/- INR; 24,000/- INR; and 26,000/- INR. Since the gratuity has been included as a part of CTC, therefore, every year Company X has deducted 6,923/- INR; 8,654/- INR; 10,385/- INR; 11,538/- INR ; 13,846/- INR; and 15,000/- INR respectively from his CTC and kept aside (15/26*Basic). However, when Ramesh resigned after the completion of SIX years, the Company should pay him 90,000/- INR (15/26*Basic*6) instead of 66,346/- INR [6,923 + 8,654 + 10,385 + 11,538 +13,846 + 15,000/-], how will they show 23,654/- INR [90,000 – 66,346]. Will they show it as loss?
Regards,
Sanjeev
From India, Mumbai
Dear Shri Kumar,
Unless specifically mentioned in the offer/ appointment letter to the effect that employee will be paid gratuity even for less than 5 years, in normal course and within the framework of the Payment of Gratuity Act, no is the answer, if the employee has not served the organisation for minimum period of 4 years & 240 days, even if the element of gratuity is shown in CTC. So, in the event of no specific mention about his eligibility for gratuity within less than 5 years of service the discretion rests solely with the employer in terms of sec. 4(5) of the Act. So, for better terms than the provisions of the Payment of Gratuity Act, a specific mention in the agreement or contract is sacrosanct for the purpose of claim.
From India, Delhi
Unless specifically mentioned in the offer/ appointment letter to the effect that employee will be paid gratuity even for less than 5 years, in normal course and within the framework of the Payment of Gratuity Act, no is the answer, if the employee has not served the organisation for minimum period of 4 years & 240 days, even if the element of gratuity is shown in CTC. So, in the event of no specific mention about his eligibility for gratuity within less than 5 years of service the discretion rests solely with the employer in terms of sec. 4(5) of the Act. So, for better terms than the provisions of the Payment of Gratuity Act, a specific mention in the agreement or contract is sacrosanct for the purpose of claim.
From India, Delhi
Dear Sanjeev,
Now your question has gone quite astray from the HR issues. With respect to the query about HR issues, profit or loss and accounting has no relevance. That is the headache of the Finance & Accounts personnel/ Chartered Accountants how to account for or under which head of account the amount has to be booked under the Indian or International Accounting Standards. As an HR professional, you have to take care of the provisions of the Gratuity Act, not the standards of accounting, which is also a very wide subject of specialisation. Had that been the headache of the HR, there would not have been the need to create a stututory Institute of Chartered Accountants of India by the Government of India and to appoint chartered accountants by the organisations only after qualifying the tough examination in three parts of the Institute or to appoint auditors to audit the accounts of the organisations.
However, if as a general knowledge you are curious to know the nitty gritty of accounting also with reference to the CTC, you may better sit with the CA of your organisation to understand that appropriately.
From India, Delhi
Now your question has gone quite astray from the HR issues. With respect to the query about HR issues, profit or loss and accounting has no relevance. That is the headache of the Finance & Accounts personnel/ Chartered Accountants how to account for or under which head of account the amount has to be booked under the Indian or International Accounting Standards. As an HR professional, you have to take care of the provisions of the Gratuity Act, not the standards of accounting, which is also a very wide subject of specialisation. Had that been the headache of the HR, there would not have been the need to create a stututory Institute of Chartered Accountants of India by the Government of India and to appoint chartered accountants by the organisations only after qualifying the tough examination in three parts of the Institute or to appoint auditors to audit the accounts of the organisations.
However, if as a general knowledge you are curious to know the nitty gritty of accounting also with reference to the CTC, you may better sit with the CA of your organisation to understand that appropriately.
From India, Delhi
Companies either take out an gratuity policy with insurance companies. or create a provision for accounting for gratuity amounts.
In such cases the amount which is earmarked in CTC but eventually not paid will be credited to the provision and amounts paid debited to the provision.
In the second case under provisioning has taken place.
From India, Pune
In such cases the amount which is earmarked in CTC but eventually not paid will be credited to the provision and amounts paid debited to the provision.
In the second case under provisioning has taken place.
From India, Pune
Hello,
Thank you for clarifying on this topic.
My question is that now I have changed about 3 organisations in the course of last 12 years, and since I did not complete 5 years, my last employer did not pay me amount of gratuity though it was part of CTC;
Can I ask them to pay that amount now? I left the last organisation in 2012 by-the-way (It is kind of late but I want to know the answer in such scenario)
Thank you for your responses.
From India
Thank you for clarifying on this topic.
My question is that now I have changed about 3 organisations in the course of last 12 years, and since I did not complete 5 years, my last employer did not pay me amount of gratuity though it was part of CTC;
Can I ask them to pay that amount now? I left the last organisation in 2012 by-the-way (It is kind of late but I want to know the answer in such scenario)
Thank you for your responses.
From India
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FORM-F-NOMINATI ON OF GRATUITY.pdf
Gratuity Form I.doc