1Dear Friends,
Greetings for the day. I have a question on the gratuity, though this subject has discussed in the length in the CTHR many times, and I have gone through that discussion also but I could not find the appropriate answer on the following points.
Is that mandatory to set-aside the gratuity funds with the LIC or any other trust from the inception.
Can the Employer pay the gratuity to the outgoing employees, when he /she leave the organization?
Can that legally deduct the gratuity amount on a monthly turn from the employees being a part of their CTC?
In case we opt for the LIC scheme, is it possible to switch the entire contribution to the LIC in the installments, if yes how many installments are allowed to pay the previous dues
Our company is planning to pay the gratuity to the outgoing employees on case to case basis, when its’ really become due.
I sincerely seek your help to get this implemented in our company .Kindly update
Many Thanks
Poonam Gandhi
From India, Delhi
1) Its not mandatory to keep funds with LIC or any other fund managers. Actually Companies do it to get expenses allwoed by the Income Tax. As per income tax, if gratuity contibution is kept with approved trust, then expesnes can be claimed in the Income Tax return. If one keeps gratuity contribution with it self, then in Income Tax, expenses will be allowed once grtauity is actually paid.
These fund managers also provide life insurance equal to grtuity benefit for the staff.
2) Company has to pay gratuity to those employees, who have served 5 or more years, at the time of leaving the company. In case of death, gratuity is paid even though employee has not completed 5 years.
3) Some companies show gratuity as part of CTC. But I think it can not be deducted from the employee's gross salary.
4) When you swicth over for 'grtauity fund management' first time in the Company and Company is already in business for years, lot of contribution is demanded by the fund manager on account of previous contribution. This previous contribution is calculated by the actuary. It depends how much contribution out of that, Company wants to give to fund manager. So please discuss with you fund manager and pay the contribution as per agreed terms.
5) Some companies who have high staff turnover like IT sector, reject the valuation of actuary, according to them it does not give fair value. However as per accounting standard 15, issued by ICAI, provision for gratuity will be made in the books accounts on the basis of acturial basis. So it will be always good to get valued your garuity from acturial in real scenario.
6) Please cross check the same before implementation. I also request experts to correct me if I am wrong.
Thx
From India, New Delhi
These fund managers also provide life insurance equal to grtuity benefit for the staff.
2) Company has to pay gratuity to those employees, who have served 5 or more years, at the time of leaving the company. In case of death, gratuity is paid even though employee has not completed 5 years.
3) Some companies show gratuity as part of CTC. But I think it can not be deducted from the employee's gross salary.
4) When you swicth over for 'grtauity fund management' first time in the Company and Company is already in business for years, lot of contribution is demanded by the fund manager on account of previous contribution. This previous contribution is calculated by the actuary. It depends how much contribution out of that, Company wants to give to fund manager. So please discuss with you fund manager and pay the contribution as per agreed terms.
5) Some companies who have high staff turnover like IT sector, reject the valuation of actuary, according to them it does not give fair value. However as per accounting standard 15, issued by ICAI, provision for gratuity will be made in the books accounts on the basis of acturial basis. So it will be always good to get valued your garuity from acturial in real scenario.
6) Please cross check the same before implementation. I also request experts to correct me if I am wrong.
Thx
From India, New Delhi
Hi
can anyone could share the legal sanctity on the following:
What if the employer does not pay for the gratuity to the outgoing employees?
What if the employer shift the eligible employees from one company to the another
I would appreciate if the seniors could come forward and update the right thing
Regards
Poonam
From India, Delhi
can anyone could share the legal sanctity on the following:
What if the employer does not pay for the gratuity to the outgoing employees?
What if the employer shift the eligible employees from one company to the another
I would appreciate if the seniors could come forward and update the right thing
Regards
Poonam
From India, Delhi
In gratuity act Form F use for nomination for dependents and form H for modification in dependents nomonation. For Information purpose.
From India, Mumbai
From India, Mumbai
Please cross check the same before implementation. I also request experts to correct me if I am wrong. Thx
From India, Mumbai
From India, Mumbai
dear sir,
i have a doubt, if registering gratuity from an approved insurer is not compulsory what does sec 4A compulsory insurance provide for. i came thru this sec when i was reading the gratuity act 1972
From China
i have a doubt, if registering gratuity from an approved insurer is not compulsory what does sec 4A compulsory insurance provide for. i came thru this sec when i was reading the gratuity act 1972
From China
Hi
What Sandeep has answered is absolutely right.
Further clarifications
a) Gratuity can not be deducted from employees salary.
b) If the employer does not pay the eligible employee on separation then legal action can be initiated. Only in case of a proven misconduct through enquiry the gratutiy can be forfeited.
c) Irrespective of the employees being shifted from company to company of the same employer there will be continuity of service.
Kind regards
Dayanand L Guddin
From Singapore, Singapore
What Sandeep has answered is absolutely right.
Further clarifications
a) Gratuity can not be deducted from employees salary.
b) If the employer does not pay the eligible employee on separation then legal action can be initiated. Only in case of a proven misconduct through enquiry the gratutiy can be forfeited.
c) Irrespective of the employees being shifted from company to company of the same employer there will be continuity of service.
Kind regards
Dayanand L Guddin
From Singapore, Singapore
Yes, section 4 A of payment of gratuity Act 1072 refers, in most of the cases, that Employer should obtain Life Insurance for gratuity. But it does not state that gratuity fund complusorirly should be invested with such life insurance company.
Thx
Sandeep
From India, New Delhi
Thx
Sandeep
From India, New Delhi
Recently the payment of gratuity amendment bill has been passed by the parliament and it shall come into force on such date as the central Govt. may, by notification in the official Gazette. Does it mean that the effective date of this bill is on the date of notification or any retrospective date ?
K.V.Aravindakshan
From India, Kochi
K.V.Aravindakshan
From India, Kochi
I agree with Sandeep & Mr. Dayanand.
I have a case and would like to know from our friends, whether an employee on resigning from a company in one post joins immediately the same company in a higher post, will be eligible for gratuity?
This type of situation comes in public sector banks when an employee after selection in higher post on advertised post has to resign from his pearlier post and joins fresh. Though there is generally no break in service and the person has worked more than 5 years in previous post. Should he be paid gratuity? And what about payment of PF?
Thus can an employee have two or more gratuity payments from same employer.?
Members are requested to enlighten on this.
PV
From India, Mumbai
I have a case and would like to know from our friends, whether an employee on resigning from a company in one post joins immediately the same company in a higher post, will be eligible for gratuity?
This type of situation comes in public sector banks when an employee after selection in higher post on advertised post has to resign from his pearlier post and joins fresh. Though there is generally no break in service and the person has worked more than 5 years in previous post. Should he be paid gratuity? And what about payment of PF?
Thus can an employee have two or more gratuity payments from same employer.?
Members are requested to enlighten on this.
PV
From India, Mumbai
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