1. The employee is not eligible for this component until he completes 5 years so why deduct this from his CTC for the first 5 years?
2. He is not even eligible under the PGA 1972 if his Basic + DA are above Rs. 10000, yet many companies still include this in his/her CTC. Isn't this a very common scenario and a cause of confusion at the time of employee exit?
What happens to the money that is deducted from the employees CTC year after year, should he leave short of 5 years.
I see many responses here just stating that PGA is not applicable until 5 years. But that is not the question being raised here. No one is questioning PGA 1972. Please stay focused on this. What is being questioned is what happens to the amount under the following circumstance.
[CASE 1] Employee leaves in 4 years. His/her CTC included Gratuity component in the Annual Appraisal for last 3 years, his/her Basic +DA was from the start well above Rs. 10000 and yet the company cited 'as per PGA 1972' against the Gratuity component despite the above. The company made the deduction from employees for the last 3 years under the guise of it being retained towards accrued gratuity despite not being applicable.
Now that the employee is leaving and demands payment of this through an Ex-Gratia Payment. I understand that this is the general practice followed my many honest companies to revert the amount via a Ex Gratia payment?
6th October 2008 From India, Pune
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