Hi, I am working as an HR in an IT company. We deduct gratuity from employee CTC. Should we mention gratuity in the appointment letter or not? If I mention it, does it have to include any clause with fine print for the minimum term of service?
From India, Gurgaon
Acknowledge(0)
Amend(0)
From India, Gurgaon
Acknowledge(0)Amend(0)
Please remain friendly and kind (focus on adding value/resources rather than speculations or judgement)
From India, Gurgaon
Acknowledge(0)Amend(0)
From India, Gurgaon
Acknowledge(0)Amend(0)
Hi Sheetal,
You should mention 'gratuity' entitlement in the appointment letter whether you follow CTC pattern or conventional pattern.
With respect to the minimum service to be eligible for gratuity, it depends on your policy, whether your firm follows the Payment of Gratuity Act or a similar one offered through other agencies like LIC, etc. Under the PG Act, 5 years of 'continuous service' (4 years + 240 days in the 5th year) is the criteria. However, if the service condition applicable is 'Fixed Term Employment' for a duration of less than 5 years of service, then gratuity is payable even if the qualifying service is less than 5 years.
Regarding 'deduction' towards gratuity, unless you really pay CTC, there is no question of deduction arising. CTC, as I understand, comprises two parts. The first part consists of a sum that includes basic, DA, HRA, other allowances, and bonus, which are parts of the monthly payable. The second part consists of components not payable monthly to employees, such as EPF contribution, leave salary, gratuity, etc., which are payable not monthly but as and when due.
From India, Bangalore
Acknowledge(0)Amend(0)
1158You should mention 'gratuity' entitlement in the appointment letter whether you follow CTC pattern or conventional pattern.
With respect to the minimum service to be eligible for gratuity, it depends on your policy, whether your firm follows the Payment of Gratuity Act or a similar one offered through other agencies like LIC, etc. Under the PG Act, 5 years of 'continuous service' (4 years + 240 days in the 5th year) is the criteria. However, if the service condition applicable is 'Fixed Term Employment' for a duration of less than 5 years of service, then gratuity is payable even if the qualifying service is less than 5 years.
Regarding 'deduction' towards gratuity, unless you really pay CTC, there is no question of deduction arising. CTC, as I understand, comprises two parts. The first part consists of a sum that includes basic, DA, HRA, other allowances, and bonus, which are parts of the monthly payable. The second part consists of components not payable monthly to employees, such as EPF contribution, leave salary, gratuity, etc., which are payable not monthly but as and when due.
From India, Bangalore
Acknowledge(0)Amend(0)Looking for something specific? - Join & Be Part Of Our Community and get connected with the right people who can help. Our AI-powered platform provides real-time fact-checking, peer-reviewed insights, and a vast historical knowledge base to support your search.
Appointment letter-format.d oc