This is a query in regards to formulating policies for a company. If the policy deviates from the norm (Act or other), does the company need to get the policy approved from an authority? If so, from whom?
For example, as per the Payment of Gratuity Act, a company has to pay an employee 15 days salary per year of service rendered, as Gratuity on his retirement (if he's completed 5 years in the company). If the company would like to set a policy stating that the employee would be eligible for 1 months salary per year of service rendered, would the company need to get this policy approved?
From India, Chicalim
For example, as per the Payment of Gratuity Act, a company has to pay an employee 15 days salary per year of service rendered, as Gratuity on his retirement (if he's completed 5 years in the company). If the company would like to set a policy stating that the employee would be eligible for 1 months salary per year of service rendered, would the company need to get this policy approved?
From India, Chicalim
As far as I am aware, a company is free to provide benefits in excess of statutory obligations, but such benefits must be taxable as per the provisions of the law.
That is, you can pay a month's gratuity for every year of service, but the extra fifteen days' salary will be deemed taxable in the employee's hands.
Jeroo
From India, Mumbai
7That is, you can pay a month's gratuity for every year of service, but the extra fifteen days' salary will be deemed taxable in the employee's hands.
Jeroo
From India, Mumbai
mdpais
Not quite. First, the company must abide by all statutory provisions, i.e. it must provide the minimum prescribed under law.
Second, the company is free to provide benefits in excess of the prescribed minimum without having to seek permission to do so.
However, where the question of taxation comes in, the company will also have to abide by the tax laws. That is, if any excess benefit is taxable either in the employee's hands as taxable benefit, or in the company's hands as additional fringe benefit, such tax must be levied/paid.
I hope this clears your queries.
Jeroo
From India, Mumbai
Not quite. First, the company must abide by all statutory provisions, i.e. it must provide the minimum prescribed under law.
Second, the company is free to provide benefits in excess of the prescribed minimum without having to seek permission to do so.
However, where the question of taxation comes in, the company will also have to abide by the tax laws. That is, if any excess benefit is taxable either in the employee's hands as taxable benefit, or in the company's hands as additional fringe benefit, such tax must be levied/paid.
I hope this clears your queries.
Jeroo
From India, Mumbai
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Hr policies in new company.doc