Labour & Industrial Laws
Payroll & Compensation
Rajesh Kumar Dubey
Manager - Hr
Asst. General Manager - Hr
Dgm - Human Resources
Siva Balamurugan
Manager- Hro(statutory Compliance)
Mrs. Snehal Kulkarni
+14 Others

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Hello friends, Is it necessary to give Gratuity to all the employees who are in company for more then 5 years ?Provided we don’t deduct the amount from the salary. RegardsNidhi
Dear Nidhi,
As per the Payment of Gratuity Act,1972, it is mandatory to give gratuity to all employees who have been serving the company for more than 4 years 8 months (as a result of a judgement from Madras High Court) irrespective of the fact whether it has been deducted from salary or not.
Amitava Majumder

Dear Amitava Majumder,
Thank you so much for your reply.
I want to clear few doubts they are :
1) It will be calculated on the last salary drawn?
2) If an employee resigns after 12 years then it will be calculated accordingly 15 days per year ?
3) If employer don't give gratuity then will it create a problem ? Its records to be maintained.
Plss reply
Thank you in advance.

Dear Seniors, Can you help me out to solve the above mention doubts. Waiting for the reply
Dear Nidhi,
Please note the formula of gratuity as follows:
1) Last Basic Drawn/26*No. of Years of Service*15
2) Yes it will be calculated for 15 days
3) he can go to labour court if employer don't give the gratuity.
Sunny Mahajan

hi Chander,
My query is solved just want to know 1 thing i.e
In 1 st year when A joined the company his salary was 6000 and today after 12 years his salary is 14000. So now if he resigns he will get 14000/26* 15 days*no of years of service.
And management has to give it thats compulsory.
And should gratuity be added in CTC structure? Or it depends on the company ?
Pls reply

Dear Nidhi,
You have got the calculation absolutely right.Yes, it's compulsory for the management to make the payment towards gratuity.
If included in the CTC structure, the employee can ask for the portion deducted even though he might not have actually worked for the eligible period.This is a catch point which has to be handled carefully.

hi amitava,
Thank you for the reply.
So point is if we deduct gratuity amount and show in CTC. Even employee can ask for money after 2 years when he resigns he is eligible for that.
Accumulated 2 years money is to be given when he leaves...Can Employer argue by saying you have not completed 5 years of service so u cannot get this money.

Dear Nidhi, Yes we have to consider last drawn basic. As per the new amendments of the act, you should not add in CTC structure. Regards Leela
Dear Nidhi,
No, Employer is supposed to do like after having deducted from CTC he is supposed to pay the employee once he/she quits/resigns the co. But, there are greedy people who don't want to pay. In this case if, the employee has time to go to labour court then he can do so......
Regards - Prakash

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