Mahaender Siingh
Private Job
Vivek991976
Hr-manager
Dinubhansali
Accounts And Finance
Prashant_pj
Working In Mnc
+2 Others

Anyone can give me a salary structure where Gratuity is the part of CTC. How we are calculating Gratuity amount during the Full & Final Settlement of an employee if he/she leaving the company before five years in the same context.
30th June 2009 From India, Faridabad
Hi Govind,
It is ok. But my main question is that when we are saying if gratuity is the part of CTC and then an employee leaving the organisation before five year. My doubts :-
- Company not paying his/her gratuity part due non compeletion of five year ?
- Employee is not getting his/her gratuity part, where as per the CTC he/she is eligible
to get this amount.
1st July 2009 From India, Faridabad
As gratuity is part of CTC, then it should have been mentioned in the offer letter/appointmnet letter that Gratuity is been paid as per Payment of Gratuity Act. And as per the said act, gratuity is to be paid only on completion of 5 years of service with the employer.
However it is the sole discretion of the company, whether to pay gratuity before completion of 5 years. However the company is not bounded , if employee resigns before completion of 5 years.
If further clarifications required, please revert back
Dinesh Bhansali

9892783763
1st July 2009 From China
Hi,
Gratuity could be used more as a retention strategy. Though it is for oldage security and one of the govt. acts to give financial security now days it is losing its importance fast as people resign before completion of 5 years. So you may show it in the appointment letter "Gratuity will be payable as per the act".
But only if someone completes 4 years you may start reminding them that they will be eligible for gratuity if at least they complete 4.5 years. - one of the retention strategies for the company.
In one of my previous companies, it was a start up and only when the first employee completed 4 years we bothered to open a gratuity fund with some minimum amount.
Thanks
Geeta
1st July 2009 From Korea, Seoul
Hi, Someone give me more detail about "Open a gratuity fund" as shared by Geeta. Like :- What is this ? What is the purpose ? How we can open it & other legal Compliances.
1st July 2009 From India, Faridabad
Hi,
Talk to LIC,they might be having a group gratuity fund in which you maintain certain amount with LIC,and since your prediction is not many employees will be there, annually eligible for gratuity so you need not maintain lakhs of rupees with the fund. However you need to estimate how much approx. may be your gratuity liability per annum. As I told , in my earlier company (an IT company) we had kept around a lakh rupees to begin with, as we were very sure not too many employees will be crossing 5 years.
Thanks
Geeta
2nd July 2009 From Korea, Seoul
Dear Mahaneder,
As per my understanding, it is not advisable to mention Gratuity as a part of CTC. If you are mentioning Gratuity in CTC, than u need to pay it to the employee, even if he leaves before the completion of 5 yrs of conitinious service. Hence, it is advisable to just mention Gratuity as per the Payment of Gratuity Act in the appoinment letter.
Reason: Just by writing Gratuity doesn't means that it is the Gratutity as per the Act. Anything written in Appoinment letter is consedered as a part of agreement between employee & employer. If the employer is paying Gratuity as mentioned in CTC detail, employee can claim that he is also eligible for Gratuity as per the Act.
Regards
Prashant

2nd July 2009 From India, Delhi
IF Gratuity is part of CTC then company should give gratuity amount at the time of full & final settlement how it come 4.81% of basic per month
For Example
Basic Salary 10000/- p.m
Gratuity is 15 days basic of every completed years of service
then amount should be divided by 26 to calculate per day salary 10000 /26= 384.6 gratuity is calculated on 26 days multiplied by 15 days means 384.6 * 15 days = 5769/- would be further divide by 12 (because 12 months in a year) means 5769 / 12 = 480.75 this is equal to 4.81 % of 10000 /- pm
I hope you people will understand this calculation if not call me on 09891151873
Vivek :no:
2nd July 2009 From India, Bangalore
Well Dinesh I dont agree with the second para because to pay or not to pay gratuity cannot depend solely on the company as this is a statutory component every rules and provisions present under Payment of Gratuity Act needs to be adhered so even if the company wants to pay it before 5 yrs they cannot the simple reason being they would be going against the rules.

2nd July 2009 From India, Calcutta
[QUOTE=vivek991976;761932]IF Gratuity is part of CTC then company should give gratuity amount at the time of full & final settlement how it come 4.81% of basic per month
For Example
Basic Salary 10000/- p.m
Gratuity is 15 days basic of every completed years of service
then amount should be divided by 26 to calculate per day salary 10000 /26= 384.6 gratuity is calculated on 26 days multiplied by 15 days means 384.6 * 15 days = 5769/- would be further divide by 12 (because 12 months in a year) means 5769 / 12 = 480.75 this is equal to 4.81 % of 10000 /- pm
you have given the example but show me the real gratuity given as per the above formula
2nd July 2009 From India, Mumbai
Hi,
Lots of confusion,follow these 3 cases:
Case 1 - If you mention Gratuity will be paid as per the gratuity act then you must follow as per the act,it is not company's descrition to pay or not to pay gratuity after an employee has put in 5 years of service.(If it is mentioned in the appointment letter to be paid as per the act implies company is not willing to pay before 5 years and nor company is liable to pay gratuity before completion of 5 years)
Case 2 - If you are not mentioning it will be paid as per the gratuity act,but showing gratuity as a part of CTC then its company's descrition to give it even before completion of 5 years. (Can be paid with F & F settlement as per the formula given by Vivek)
Case 3 - However it is mandatory ,weather it is mentioned in the appointment letter or not if an employee has completed 5 years of service he must be paid gratuity as per the rule of the land (India).
3rd July 2009 From Korea, Seoul
Hi,
I m leaving my current organization after 5 years 2 months. after that also they are telling you are not applicable for gratuity. they informed its depends upon package when you start.
my starting salary was 8000 around and each year its increased on hike time so please tell me how to resolve this confusion or they are right.
please help me out.
24th September 2018 From India, Bengaluru
You all given your views regarding this my question is that do we have any ceal from High court or supreme court to pay or not to pay the Gratuity amount, if it would be part of ctc? I think not yet.. if we are not following the law then why we are going through Payment of Gratuity Act,1972. Is there any means of Indian Labour laws for the Pvt.Ltd companies or firms?
NO...... ... then there is no mean actually... keeping you in the organization and firing you from the organization is completely company discretion ...it same giving you the gratuity and not giving you the gratuity it would be company decision not your and me or the govt.
Pvt companies and firms are pvt... the owner is only law and order no any Indian Labour Laws and govt.
29th September 2018 From India, Agolai
I finished 4 years 5 months 10 days in last job. Gratuity was mentioned in my ANNUAL SALARY. As per my understanding, I am eligible to get anything mentioned in salary. should Am I eligible? can leaves be counted towards service duration?
16th January 2019 From India, Pune
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