If the person was 62 years old when he joined at a salary of $70,000, and he worked for 14 years without any retirement or gratuity clauses mentioned in the appointment letter, do we need to pay him gratuity? Currently, his total monthly salary is $180,000, and the company wishes for him to work off-role due to his age.
From India, Kolkata
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From India, Kolkata
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Dear Colleague,
Based on the given information, such contracts are not appropriate, and we should review such a system. In this situation, the employee is eligible for gratuity as they have completed 14 years of service. According to the Gratuity Act, there is no level or designation that bars gratuity. Similarly, regardless of salary, an employee is eligible for gratuity when they complete 5 years of continuous service.
However, the employer needs to pay only 15 days of wages for every completed year of service as gratuity. The maximum gratuity that is non-taxable is 20 Lakhs as of now. The employer may pay more gratuity over and above 20 Lakhs, but it is taxable and subject to TDS.
Actually, gratuity is payable for Basic and DA only. If the payment is a consolidated pay, then the last drawn total consolidated pay should be taken into account.
Morally, when someone works for 14 years for a company, the employee should not be deprived of their gratuity. It is an honor to be given to them.
I hope this helps clarify the situation. Let me know if you need further assistance or information.
Best regards,
[Your Name]
From India, Chennai
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337Based on the given information, such contracts are not appropriate, and we should review such a system. In this situation, the employee is eligible for gratuity as they have completed 14 years of service. According to the Gratuity Act, there is no level or designation that bars gratuity. Similarly, regardless of salary, an employee is eligible for gratuity when they complete 5 years of continuous service.
However, the employer needs to pay only 15 days of wages for every completed year of service as gratuity. The maximum gratuity that is non-taxable is 20 Lakhs as of now. The employer may pay more gratuity over and above 20 Lakhs, but it is taxable and subject to TDS.
Actually, gratuity is payable for Basic and DA only. If the payment is a consolidated pay, then the last drawn total consolidated pay should be taken into account.
Morally, when someone works for 14 years for a company, the employee should not be deprived of their gratuity. It is an honor to be given to them.
I hope this helps clarify the situation. Let me know if you need further assistance or information.
Best regards,
[Your Name]
From India, Chennai
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For gratuity, I have nothing to add to what Dr. Shivakumar said. His answer is perfect.
For Off-Role working, I assume you mean to appoint him as a consultant from now on? If you do, you have to pay the gratuity till date and then let him resign. He can be reappointed as a consultant but be careful in designing the appointment letter so that it does not end up being judged as a full-term employee.
In the case of a consultancy agreement, ensure you deduct TDS on the payment.
From India, Mumbai
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For Off-Role working, I assume you mean to appoint him as a consultant from now on? If you do, you have to pay the gratuity till date and then let him resign. He can be reappointed as a consultant but be careful in designing the appointment letter so that it does not end up being judged as a full-term employee.
In the case of a consultancy agreement, ensure you deduct TDS on the payment.
From India, Mumbai
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