Dear sir,
I worked in a private company where gratuity was deducted from me. I worked for 2 years and 2 months; they deducted gratuity and did not pay, stating I have not completed 5 years. Are they right to deduct gratuity from me? Secondly, the provident fund (PF) was not deducted, stating "PF exempt." Please clarify.
From India, New Delhi
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I worked in a private company where gratuity was deducted from me. I worked for 2 years and 2 months; they deducted gratuity and did not pay, stating I have not completed 5 years. Are they right to deduct gratuity from me? Secondly, the provident fund (PF) was not deducted, stating "PF exempt." Please clarify.
From India, New Delhi
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Gratuity is a monetary benefit given by the employer to their employee at the time of retirement or at the time of separation, after the completion of specified tenure (as defined in the Payment of Gratuity Act, 1972). It is a defined benefit plan where no contributions are made by the employee. Prior to 1972, there was no law requiring the employer to pay employees gratuity upon retirement.
In view of the above, it is completely incorrect, illegal, and unjustified if your employer deducted "gratuity" from your pay packet. Depending on the amount deducted from your salary under the heading "gratuity," you may even consider initiating suitable legal action against the employer.
From India, Aizawl
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651In view of the above, it is completely incorrect, illegal, and unjustified if your employer deducted "gratuity" from your pay packet. Depending on the amount deducted from your salary under the heading "gratuity," you may even consider initiating suitable legal action against the employer.
From India, Aizawl
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Employers generally add gratuity as part of the CTC to make it look attractive, but neither is it paid nor shown as a deduction. If the gratuity amount is shown as deducted from salary, then it is illegal and improper as there is no provision for making such a deduction; it is an illegal deduction and actionable against the employer. However, if no deduction on the gratuity head is shown from the salary and the employer has denied gratuity to you, then it is not wrong.
If you were drawing a salary in excess of the PF limit right from the start of your employment with this company and if you were not a member of the scheme earlier, then the action is justified. Otherwise, it is also illegal.
From India, Mumbai
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If you were drawing a salary in excess of the PF limit right from the start of your employment with this company and if you were not a member of the scheme earlier, then the action is justified. Otherwise, it is also illegal.
From India, Mumbai
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Dear Ravi,
CTC is a part of an implied contract. An appointment letter is drawn or a CTC sheet is signed.
The condition of five years of continuous service is there in sec 4 read with sec 2A of the Payment of Gratuity Act, 1972. But the same section, under its subsection 5, provides that:
"Nothing in this section shall affect the right of an employee to receive better terms of gratuity under any award or agreement or contract with the employer."
If your employment contract (appointment letter or signed CTC sheet) is available with you, and while taking the cost of gratuity into account, if you and your employer have agreed and included the gratuity component in the CTC without any conditions specified, you are entitled to the gratuity, as that appointment letter/CTC sheet becomes an instrument providing better terms and therefore, it would be treated as part of the law. If your employer denies it, please give him a notice in Form I, wait for one month for his reply, and then file a claim in Form N.
However, if in your appointment letter/cost sheet, it has been specified that gratuity will be payable on completion of five years of continuous service, then you cannot claim it. Even if it is mentioned that gratuity is payable as per the Payment of Gratuity Act, you cannot claim it.
With due respect to learned friends who expressed their opinion that mentioning gratuity in CTC is cut from an agreed pay-packet, I strongly disagree with their contentions. Computing, explaining, and agreeing on the "cost" of an employee before joining does not violate any law of the land. On the other hand, it removes vagueness of the terms of the employment contract. It is advisable for both employers and employees to have clarity before signing a contract.
P K Jadia,
Labour Law Consultant, Silvassa, DNH, and DD,
9787625260
From India, Vapi
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CTC is a part of an implied contract. An appointment letter is drawn or a CTC sheet is signed.
The condition of five years of continuous service is there in sec 4 read with sec 2A of the Payment of Gratuity Act, 1972. But the same section, under its subsection 5, provides that:
"Nothing in this section shall affect the right of an employee to receive better terms of gratuity under any award or agreement or contract with the employer."
If your employment contract (appointment letter or signed CTC sheet) is available with you, and while taking the cost of gratuity into account, if you and your employer have agreed and included the gratuity component in the CTC without any conditions specified, you are entitled to the gratuity, as that appointment letter/CTC sheet becomes an instrument providing better terms and therefore, it would be treated as part of the law. If your employer denies it, please give him a notice in Form I, wait for one month for his reply, and then file a claim in Form N.
However, if in your appointment letter/cost sheet, it has been specified that gratuity will be payable on completion of five years of continuous service, then you cannot claim it. Even if it is mentioned that gratuity is payable as per the Payment of Gratuity Act, you cannot claim it.
With due respect to learned friends who expressed their opinion that mentioning gratuity in CTC is cut from an agreed pay-packet, I strongly disagree with their contentions. Computing, explaining, and agreeing on the "cost" of an employee before joining does not violate any law of the land. On the other hand, it removes vagueness of the terms of the employment contract. It is advisable for both employers and employees to have clarity before signing a contract.
P K Jadia,
Labour Law Consultant, Silvassa, DNH, and DD,
9787625260
From India, Vapi
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Hi,
Employers used to add gratuity to make your CTC more attractive. It is not deducted from your salary; it is part of your CTC and will be given to you if you complete a minimum of 5 years of service with the company.
From India, New Delhi
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Employers used to add gratuity to make your CTC more attractive. It is not deducted from your salary; it is part of your CTC and will be given to you if you complete a minimum of 5 years of service with the company.
From India, New Delhi
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Dear HR Manager,
Your views are not exactly as the law stands today. Please read Subsection 5 of Section 4 of the PGA.
Your CTC is your valid understanding (implied contract). If it does not specify the eligibility for gratuity payment as per the PGA, or a minimum qualifying continuous service of five years, by default, it is payable without any qualifying service.
From India, Vapi
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Your views are not exactly as the law stands today. Please read Subsection 5 of Section 4 of the PGA.
Your CTC is your valid understanding (implied contract). If it does not specify the eligibility for gratuity payment as per the PGA, or a minimum qualifying continuous service of five years, by default, it is payable without any qualifying service.
From India, Vapi
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SBT Vs Asst. Labour Commissioner- Gratuity dismissed employee-LTS.PD F
FORM I(Application for Gratuity by an employee).doc