Hi, I am working with a small MNC where 60 employees are working, some of them have completed five years of service. we were deducting monthly contribution from their salary. now they are insisting to stop the deduction and add in to monthly gross. now my query is as we shown gratuity as a one of the component of his CTC, if we stop the deduction then the contribution is payable from company account? kindly suggest what will be done in this case..
Aniket
From India, Pune
Aniket
From India, Pune
Hi Aniket
It depends on the company policies. Normally gratuity will be part of CTC. Once you start gratuity part in CTC then you can't remove from CTC. Advice the employees even if they are working since 5 years or more as it should be deducted from CTC only. Coz gratuity will be paid only at the time of retirement or time of leaving the organisation and the same will be calculated for number of years he/she has service. It is not limited to just 5 years.
From India, Bangalore
633It depends on the company policies. Normally gratuity will be part of CTC. Once you start gratuity part in CTC then you can't remove from CTC. Advice the employees even if they are working since 5 years or more as it should be deducted from CTC only. Coz gratuity will be paid only at the time of retirement or time of leaving the organisation and the same will be calculated for number of years he/she has service. It is not limited to just 5 years.
From India, Bangalore
In my opinion, the employees are asking the Company to stop deduction from their salary but contribute it from their side and add it to the CTC.
They are right in the sense that Gratuity in its true sense is an amount that the organization pays as a gratitude to the employee for putting in a long service.
Many Companies deduct it from the salary of the employees whereas it should be paid by the employer and added to the CTC.
I think the employees are right on their part as in the current situation, they are being forced to contribute the amount which is the liability of the employer.
From India, New Delhi
They are right in the sense that Gratuity in its true sense is an amount that the organization pays as a gratitude to the employee for putting in a long service.
Many Companies deduct it from the salary of the employees whereas it should be paid by the employer and added to the CTC.
I think the employees are right on their part as in the current situation, they are being forced to contribute the amount which is the liability of the employer.
From India, New Delhi
Dear Aniket,
If the policy of your company CTC states gratuity to be part of it then it has nothing to do with 5 years completion of employees tenure. It still remains part of CTC. If at this moment, basis their request you tend to change then pl keep in mind that it has to be a general change and all other employees about to complete 5 years in the company should also get the benefit else it may lead to grievance.
Best thing would be to explain all employees that Gratuity as a part of CTC has nothing to do with 5 years. It still remains as the company is liable to pay gratuity for "N" number of years they work. And I didn't understand the concept of adding gratuity in gross salary? If it means adding same amount of contribution under some other head in gross salary, they are pointing towards increment. In such case, ideally you should not do so & introduce commitment bonus, the amount of which can be decided by your management (eg. Rs. 1000 * no of service years completed above 5 years. the amount can vary depending on grade of employee) This will motivate & also give them the feeling of being recognized in the company.
Secondly, like Ms. Avika said that company is liable to pay to show gratitude and should not be considered as CTC then it must be from day one. Gratitude doesn't come in only after 5 years. This would further demotivate your employees who have not completed 5 years.
Pl look into several other factors before bringing in the amendment. You must also understand that the management should be ready to accept this huge liability.
Regards,
Hiral
From India, Ahmedabad
If the policy of your company CTC states gratuity to be part of it then it has nothing to do with 5 years completion of employees tenure. It still remains part of CTC. If at this moment, basis their request you tend to change then pl keep in mind that it has to be a general change and all other employees about to complete 5 years in the company should also get the benefit else it may lead to grievance.
Best thing would be to explain all employees that Gratuity as a part of CTC has nothing to do with 5 years. It still remains as the company is liable to pay gratuity for "N" number of years they work. And I didn't understand the concept of adding gratuity in gross salary? If it means adding same amount of contribution under some other head in gross salary, they are pointing towards increment. In such case, ideally you should not do so & introduce commitment bonus, the amount of which can be decided by your management (eg. Rs. 1000 * no of service years completed above 5 years. the amount can vary depending on grade of employee) This will motivate & also give them the feeling of being recognized in the company.
Secondly, like Ms. Avika said that company is liable to pay to show gratitude and should not be considered as CTC then it must be from day one. Gratitude doesn't come in only after 5 years. This would further demotivate your employees who have not completed 5 years.
Pl look into several other factors before bringing in the amendment. You must also understand that the management should be ready to accept this huge liability.
Regards,
Hiral
From India, Ahmedabad
Dear Aniket,
Showing gratuity as part of CTC is not a right practice. This has to be accrued separately for MIS to the Management. By incorporating in CTC you have made it look bigger that the actual one. For an employee, what he/she gets in hand is more relevant that what they can expect after 5 years.
Please make changes as requested by employees or you may loose the talent for some such petty thing.
Regards,
Murali
From India, Chennai
Showing gratuity as part of CTC is not a right practice. This has to be accrued separately for MIS to the Management. By incorporating in CTC you have made it look bigger that the actual one. For an employee, what he/she gets in hand is more relevant that what they can expect after 5 years.
Please make changes as requested by employees or you may loose the talent for some such petty thing.
Regards,
Murali
From India, Chennai
dear aniket,
The deduction of gratuity contribution from the salary is illegal. Gratuity is one time payment by employer upon resignation, superannuation or termination. So employees dont have to contribute in that. However, now that it is already done, you can show some good gesture by adding it in the full and final payment, any additional amount taken from the employees.
From India, Pune
The deduction of gratuity contribution from the salary is illegal. Gratuity is one time payment by employer upon resignation, superannuation or termination. So employees dont have to contribute in that. However, now that it is already done, you can show some good gesture by adding it in the full and final payment, any additional amount taken from the employees.
From India, Pune
Deduction of gratuity from salary is not correct.You can show it in CTC for costing or MIS purpose.If gratuity is paid from the amount deducted from employees then where is the employer discharging his legal obligation.
Varghese Mathew
09961266966
From India, Thiruvananthapuram
Varghese Mathew
09961266966
From India, Thiruvananthapuram
Deduction of Gratuity from the Salary of the Employees is unlawful. Gratuity is an amount paid by the employer to the employee, when he/she retires or leaves the organization. Moreover it is a right of the employee to gratuity, when he/she completes 4.6 years of continuous service. Convince the management this.
Hareesh
From India, Kochi
Hareesh
From India, Kochi
Dear member
Need a clarification :-
What do you mean by deducting amount of Gratuity from salary ?
If it means that the amount of gratutity is being deducted from the normal salary payable on a monthy basis than the deduction is entierly illegal and you should not only stop the practice of deducting it from salary but you should also refund the amount deducted till now to the employees.
If deduction from salary is on account of Gratutiy being part of CTC and not actual deduction then you will have to explain to the employees the concept of CTC, Gross Salary and Take home salary and convince them that the practice adopted by you is in line with the practices adopted by many organisations.
From India, Mumbai
Need a clarification :-
What do you mean by deducting amount of Gratuity from salary ?
If it means that the amount of gratutity is being deducted from the normal salary payable on a monthy basis than the deduction is entierly illegal and you should not only stop the practice of deducting it from salary but you should also refund the amount deducted till now to the employees.
If deduction from salary is on account of Gratutiy being part of CTC and not actual deduction then you will have to explain to the employees the concept of CTC, Gross Salary and Take home salary and convince them that the practice adopted by you is in line with the practices adopted by many organisations.
From India, Mumbai
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Payment of Gratuity Act, 1972 & The Rules.ppt
THE PAYMENT OF GRATUITY ACT 1972.doc