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it does not make any difference whether the employee is working onsite or offsite, or whether working in India or abroad. only important thing is that he is defined as your employee and gratuity benefits shall verily be legitimate to be paid to the employee
thanks and regards
From India, Pune
Do you have any Final Payment Policy for employees who resign at onsite location ??
Or, they are just allowed to go without any payments from the company; (for outstanding salary, leave salary etc.); on the presumption that "since they themselves have made a choice for a better future and career prospect, why should the company pay them anything at all !!"
Your second post of clarification; does it imply your company's policy that "since he has been transferred to the UK company; it is not our headache whether he gets any payment or not. Moreover Payment of Gratuity Act is an Indian Act, so how does it apply in U.K., Right ?"
From your posts, it is difficult to infer anything else than what is stated above; however; do enlighten us on your company policy.
From India, Delhi
An employer cannot escape the payment of gratuity to eligible employees, under the Payment of Gratuity Act.
From India, Chandigarh
From United Kingdom
You have to clarify the following
1. Was the employee on the rolls of your company in India?
2. Was he transferred or seconded (handed over to UK).
In any case in my opinion if he has been transferred and was on your rolls then you need to pay Gratuity till his date of resignation.
However, if he has been seconded then you need to compute Gratuity till he served with you and pay him.
In simple terms if you had paid salary till he resigned then Gratuity is payable till his date of exit, if salary is paid by UK then till he served in India, gratuity is payable.
You may also come across a situation wherein the UK company will be paying the salary but will claim as a reimbursement from the Indian Company. Even in such case in my opinion Gratuity is payable till his date of exit.
Trust the matter is clear
From India, Madras
Let this be clear as HR Persons:
1. Gratuity is payable on completion of 5 years
2. It is an act/rule and not company policy
3. As one of the respondent has answered, whether the person is employed by Indian company or otherwise is all matters. If appointed by Indian company, whether he works in India or abroad, he need to be paid Gratuity
4. As one more respondent has answered, if the person is appointed by Indian company, but working in a foreign country and taking salary there and reimbursed by Indian company, even then also the gratutiy is payable
5. Only if the person has resigned and has been taken-in as a fresh employee in their foregin company, if the person is eligible for gratuity till his date of resignation and if he has completed 5 years, he is eligible for gratuity
Yes, irrespective of whether the person is working for your foreign company (on deputation or transfer), as long as he is in the rolls of your company, you need to pay Gratutuity. As someone rightly said, it is not company's policy, it is a statutory obligation.
By the way, I came across something like, when you show the gratuity amount in your CTC computation, you need to pay gratuity whether he completes 5 years or no. Is it right? If any one has any court ruling on this score, can send me the same on throw light in this too.
From India, Madras
Gratuity is a act and should be followed at any cost by any company registered inIndia
As You said if the employee is under Indian payroll and working onsite at some part of the world outside India Your company has to pay him gratuity if the employee completes 5 years of service
If your company in India has the employee transferred (send) to any sister concern which doesnot have any compliance with Book of Records with Indian ACts Then You can carry on as per the government Act of that particular country where his present Employment is enrolled
From India, Visakhapatnam
the person should send a legal notice to your company. then only the employer will understand that parliament is mighter than him so far as policy formulation is concern..........
From India, Calcutta
1. basic/26 x 15 days x number of years of service
2. BASIC + DA (Last Pay drawn) X 15 /26 X No. OF YEARS WORKS
There is no question of calculating differently.
From India, Thiruvananthapuram
No policy can be derived against law.if it is derived then itz null and void.from ur question itself everybody can say that u r liable to pay gratuity.but payment of gratuity for the last 7 months where he worked in UK depends upon the agreement between ur company with ur partner in Uk and this should be known to the employee and he should accept for the same.
From India, Madras
I agree with Shri K. Ramachandra of Bangalore. As per Gratuiity Act, if an employee completes five years of service in an organisation, he automatically become eligible for payment of Gratuity under the Act. One more feature is there that it is not necessary that an employee has to request for payment of gratuity from his ex-employer. If company received any request letter from such ex-employee, the amount of gratuity is to be paid to him within one month from the date of his resignation otherwise, if the ex-employee goes to court for payment of gratuity, company will be in trouble. Secondly, if the resigned employee does not make any formal request for payment of gratuity, even then the company has to make the payment of gratuity within one month from the date of his resignation. In case, if company does not have any address of the ex-employee, the amount of gratuity is to be deposited to the concerned government authority.
From India, Mumbai
1. Will he need to work for 5 years to be eilgible to get the gratuity or for 1 year.
2. Can the employees experience letter be combined for India, UK and then again India experience.
3. If the employee is required to join the parent company in other country due to business requirement, then their gratuity should not be stopped.
From India, Gurgaon
The reason why company's show Gratuity as CTC is to have provisions for payment of Gratuity in the event the employee quits the organisation. But it does not mean that just because Gratuity is shown in CTC you need to pay Gratuity even if the employee has not completed 5 year of service.
I trust you are aware that LIC has a Group Gratuity Scheme wherein LIC sends you an actuarial valuation every based on the salary (Basic + DA) details provided by you. Based on this valuation LIC requests you to contribute towards the company's Group Gratuity Scheme. Here, the company actually pays the amount to LIC and LIC in turn follows the Gratuity rules when they make payments to the employee to the extent fund is available (paid by the employer). This fund also earns interest as declared by LIC from time to time.
But the best feature here is if you cover all your employees with a marginal risk premium LIC pays Gratuity till the date of his superannuation even if the employee dies while in service without actually reaching the age of super annuation. In other words if the employee dies when he is 50 years after rendering 10 years of service in the organisation, LIC will pay till his superannuation say 58 years i.e 10 years + 8 years = 18 years of service will be paid by LIC, whereas, as employer we will actually be paying only for 10 years in such a case.
So the Gratuity act is an independant act and should not be linked with your CTC document. You don't really need any court ruling for this.
From India, Madras
Gratuity calculation must be common to all employees. (Basic + DA) /26 X 15 days X Nr. of years of service or part thereof in excess of 6 months.
However, if the employer is willing the number of days can be improved beyond 15 days wages. But if so decided it must be uniform for all employees and you can't have discrimination amongst them.
Beware!!, once you declare such a policy you cannot go back on it at any point of time. Because every act states that if the employer promotes a scheme that is better than the act the employer has to continue with it.
From India, Madras
The answers lie very much in your question itself.
He has worked for 4 years and resigned. On last day of working you will work out the Full and Final Settlement worksheet which will also include his Gratuity eligibility if any. So if he has quit after working for 4 years he will not be eligible for Gratuity.
In the second case he served for 2 years abroard and rejoins in India. He is a new employee according to you, as he has resigned.
For example let us look at a different case.
An employee has worked in your company for 4 years and for some reason quit. He worked for some other company for 2 years and wishes to rejoin your company and your company also selects him for re - entry. In such a case when he left your organisation he would not have received Gratuity. Upon his rejoining he is treated as if he has joined on that day (new employee)
Moreover, please note that all other Statutory dealings PF etc will automatically be severed once he has quit but he has the option to continue with the same PF number, but the intervening period of 2 years will be considered as break in service as per PF. But please note that because he has been permitted to continue his PF membership, it does not mean that the employer has to take cognisance of the past employment of 4 years as service rendered by him for Gratuity act.
As regards experience certificate please issue seperate experience certificates (if he has worked abroad) for the same company and do not combine the experience at different locations, though it is the same company. This will be applicable if he has been asked to resign at each location. This advise is to save you from the claim of continuous service. But if he has been transferred to different locations within India then the experience certificate will include service at different locations.
Regarding the third question, all the terms and conditions he accepts at the time of his joining at different locations will be binding on him as the rules and regulations of the respective country will be applicable to the employer, it is irrespective of the nationality of the employee. For example several Multinational companies have foreigners on Indian rolls and the acts applicable in India will only apply to them and we will not be able to adopt Statutory provisions of the respective countries as some acts will be far superior in terms of monetary benefits.
Trust matter is clear
From India, Madras
Location has no relevance insofar as entitlement for and payment of Gratuity is concerned.
In the present case you will have to pay to the employee 12 years' Gratuity.
Since you have asked, let me tell you that your Company Rules are not legally tenable.
From India, Mumbai
I think large IT companies prefer to add to their bottom line than to invest in a legal dept. or have a good HR deptt. The whole thread speaks about how legal compliance has lost its effectiveness as a deterrent and the labour laws lacking teeths. It seems any company can come up with anything and call it anything - creativity, you see!
From India, Delhi
The main eligibility criterion are as under:
Gratuity Eligibility Criteria: Gratuity shall be payable to an employee on termination of his employment after he has rendered continuous service for not less than 5 years. Thus for an employee to become entitled for the payment of gratuity, he must have rendered continuous service of at least 5 years. The completion of continuous service of 5 years is not necessary where the termination of the employment of an employee is due to his death or disablement.
Wages for calculation: Gratuity is calculated at the rate of 15 days’ wages for every completed year as if the month comprises of 26 days at the last drawn wages.
Calculation for piece rated employee: At the rate of 15 days’ wages for every completed year on an average of 3 months wages
Calculation for seasonal employee: At the rate of 7 days’ wages for every completed year of service.
Employee: means any person (other than an apprentice) employed on wages, in any establishment, factory, mine, oilfield, plantation, port, railway company or shop, to do any skilled, semi-skilled, or unskilled, manual, supervisory, technical or clerical work, whether the terms of such employment are express or implied, and whether or not such person is employed in a managerial or administrative capacity, but does not include any such person who holds a post under the Central Government or a State Government and is governed by any other Act or by any rules providing for payment of gratuity. All employees irrespective of status or salary.
Wages: means all emoluments which are earned by an employee while on duty or on leave in accordance with the terms and conditions of his employment and which are paid or are payable to him in cash and includes dearness allowance but does not include any bonus, commission, house rent allowance, overtime wages and any other allowance.
From India, Chandigarh
The questions we should look into are :-
1) Whether his appointment is by the Indian company ?
2) Whether the employee is still on the rolls of Indian company ?
If the answer is "Yes", he is eligible for gratuity for the whole period as per the Gr act.
Further to this, if his service was transferred by Indian company to Foreign company on a mutual consent/ by his option or by an order by the employer on administrative /or other reasons of your company even after severing his service with Indian company, he is eligible to get gratuity for his Indian service, if not spelled anything regarding on his gratuity eligibility, as per the order/contract for his foreign assignment. ie; total service less 18 months.
From India, Calicut
Just like in cricket when a decision for giving LBW is given by the UMPIRE the benefit of doubt is to be given to the batsmen.Similarly when a doubt arises in the mind of the HR professional to provide/deny a benefit to the Employee the benefit of doubt is to be given to the employee. Gratuity is a legal entitlement and not gratis which all may note.Unpaid Gratuity is covered by Sec 2 (10) of THE BOMBAY LABOUR WELFARE FUND ACT,1953
"unpaid accumulation" means all payments due to the employees but not made to them within a period of three years from the date on which they became due whether before or after the commencement of this Act including the wages, and gratuity legally payable but not including the amount of contribution, if any, paid by an employer to a provident fund established under the Employees' Provident Funds Act, 1952 (XIV of 1952);
In accordance with Sec 3 Welfare Fund
(1)The Administrator shall constitute a fund called the Labour Welfare Fund, and notwithstanding anything contained in any other law for the time being in force or in any contract or instrument; all unpaid accumulations shall be paid at such intervals as may be prescribed to the Board, which shall keep a separate account therefor until claims thereto have been decided in the manner provided in section 6A, and the other sums specified in sub-section (2) shall be paid into the Fund.
(2)The Fund shall consist of-
(a)all fines realised from the employees;
(b)unpaid accumulations transferred to the Fund under section 6A;
Sec 7 A deals with Unpaid acumulations and claims thereto:
(1)All unpaid accumulations shall be deemed to be abandoned property.
(2) Any unpaid accumulations paid to the Board in accordance with the provision of section 3 shall on such payment, discharge an employer of the liability to make payment to an employee in respect thereof but to the extent only or the amount paid to the Board, and the liability to make payment to the employee to the extent aforesaid shall subject to the succeeding provisions of this section be deemed to be transferred to the Board
The impression that when a person is terminated ,resigns or absconds or severance takes place or does not claim his dues the Employer can appropriate the amounts due the Employee is not the correct approach.These are in the nature of their entitlement.What the employee in the maximum deduct is notice pay if proper notice is not given.
because the Employment market is vibrant Employees as they are being rewarded more are not bothered of their past entitlements.Employers by way of ethics should not take advantage of the situation.
Please note it the Employees money which is in the Employers hands.Such amounts must be immediately transferred to unpaid Salaries Account and after three years deposited with the Welfare Fund.
The above is an essence of Statutory compliance and what is not the employers money but the Employees cannot be retained or illegally enriched.
Advocates & Notaries & Legal Consultants[HR]
E-mail : rajanassociates@eth,net,
From India, Bangalore
Mr Surendra M Bhanot and K Ramachandra were perfectly answered.
Amrita Mishra/Sachin lala
From India, Dhanbad
I welcome you to CiteHR.com and look forward to a long fruitful association with you.
I appreciate your spirit and emotions.
Which post are you referring to ?? There are two posts in this thread.
I wonder how all the learned members have not taken cognizance of the error in my post, as pointed out by you !!
Dear friend, your remarks remind me of an incident that took place some years back.
The moral of the story is : At times, things are not stated in plain English, but one has to read "between the lines".I was at the company lawyers' office as he was talking to another visitor, "I think your HR deptt. has gone to the zoo !!"
The other person could not understand this remark.
The renowned lawyer turned to me and asked, "Did you understand what I meant ?"
I also said, "I am sorry Sir, I really have no idea what you are talking about."
He then explained, "What I wanted to say was that the department has gone to the dogs. But since it would not sound nice, I said it has gone to the zoo."
There are times when satire, sarcasm, dryness, mockery, causticness, wit, sardonicism, dramatic irony etc. are used in writing (and in English literature/composition).
I did not want to publicly embarrass our member Sanjay_n, whose company is not paying gratuity to people who have rendered more than 11 years of service; on one pretext or the other.
Hence, I used apparently in-offensive language, coaxing him to come out with more information/disclosures, and to make him understand that it is neither fair nor legal. (For obvious reasons, he chose not to reply to my queries).
However, I think unlike other experienced members who were able to understand what I am implying, you as a new member, were unable to fathom it.
I request you to kindly re-read my post again, without rushing through it, and try to understand what I actually wish to convey; and you"ll find that nothing has been recommended by me, which is contrary to the provisions enshrined in the Payment of Gratuity Act 1972.
I have taken your statement in a positive way and I would also request you to do the same. There are many things in life; which are not "instant" or "fast" like noodles, food or coffee; and they need to be chewed, enjoyed and digested.... slowly.
From India, Delhi
Ist you have recruited in india as indian company, so your company is liable to pay gratuity who is completed 5 years of service.
IInd you are transfered to UK on which company or branch.
1) If you have deputed/transfered to UK on the basis of present appointment i.e., indian company, then you are not liable for payment of gratuity till resignation.
II) If you have transfered to UK in your subsidary or any your controlled company (name change) which was followed by the rules and regulations of UK. you are liabile to pay gratuity in indian company if he completed 5 years of service.
From India, Hyderabad
Just want to know if the Gratuity is a part of CTC and if the employee does not complete 5 Years of service and resigns then is that deducted amount payable to him. Does this supported by any evidance or court.
Pls share your views on this as lot of companies are showing gratuity as a part of CTC.
From India, Pune
To calculate gratuity for 6 year 6month & 20 days
basis & Da 11000RS
as already answered by our friends, gratuity payable is for 7 years (6months and above to be treated as one year)
(Basic+ DA)x7x15 / 26 i.e. 11000x7x15/26
Hope you got it ?
Ramachandra has clearly calrified your concerns and I completely agree with him .
In addition to this I want to share my opinion on Gratuity . Employee who has completed 5 years of continous service is eligible for Gratuity . There is a confusion on the eligilbility criteria due to the recent court order citing a employee who completes 4 years and 240 days is eligible . Agreed this is case , not an amendment in the law , unless there is a amendment completion of 4 years and 240 days cannot be effected as a practice but can be implemented if an employer retrenches an employee during that period.
I welcome exeperts thoughts .
From United States, Bentonville
An year means, it is always 365 days even for gratuity calculation. For the first eligibility, it is a clear 365 x 5(year) days. 240 days is working days generally taken for EL eligibility in many companies and Gratuity act does not specify about considering 240 days. As you say, considering 240 days could be a specific case on specific grounds. Any time, before taking any decision the companies will have the option to take a legal opinion from their company Legal Advisors. Otherwise, it will be always legal to consider 365 days x 5 for the first eligibility.
Hope every one agrees with this.
Hope your question is - regarding withdrawal of PF
There is a simple procedure to withdraw PF once you leave company.
1. Contact the conerned person in HR Department
2. Fill-in Form 19 (give your SB Account No.) & also Form 10-C in case your service is more than 6 months & less than 10 years.
3. The HR department will get it attested from the authorised signatory of the company
4. The form will be sent by HR department to concerned PF office for settlement (in case you want to hand it over personally to PF office, you may do so)
5. The amount will be credited to your SB account directly by PF office - say by 1.5 to 2 months
the application has to be submitted after completion of 2 months on resigning and immediately on retirement
In case you have joined some other company, you have the option to transfer the PF amount to your new account. For this, you may contact the present employer and fill-up Form 13 for transfer of PF accumulations.
No where in the contract or company documents mentions that you will be deprived of your gratuity amount after working onsite.
One of the HR person talked to me on the phone stating 'You will not receive the gratuity since you were working onsite.However he also agreed that its no where mentioned in the any contract.
So i had asked them to mention the same in writing in an email.
Could you confirm whether i am eligible for Gratuity?
Could you also guide me how to proceed further if they decline paying me the Gratuity amount?
From Denmark, Copenhagen
Today I spoke to my ex employer HR would told me that 'As per the process, since i have resigned at onsite
I would not be eligible for gratuity'.However no were in the contract or SOP's, anything about Gratuity was stated.
Kindly help me with the channel to follow later.
In my contract, the below were the points mentioned:
The assignment will be for an initial period of 3 Months.
Should there be changes to business requirements by accepting this assignment
you agree to changes to your secondment including but not limited to:
• Changes to the duration of the assignment
• Transfer to another client account subject to immigration papers being in
• Returning to your place of work in India
All the above terms are as per our current policies and practices and may be
amended from time to time. You will be informed of any amendments and will be
governed by the changed rules of the Company
While on deputation you will continue to be governed by all other service
conditions and rules of the Company as framed from time to time.
I also had an Employment Contract as per Danish laws for the Work Permit.
Currently I am working in Denmark.
From Denmark, Copenhagen
Based on the details given by you, you may take following action:
The contract points indicated by you are general in nature and does not specify the monetary benefits payable to you (including gratuity). Payment of gratuity need not be indicated in the appointment letter. But the question is were you taken as an employee by the company or otherwise (what was your designation). Any way from the brief points you have indicated, following points be noted and action can be taken:
1. Since you have completd 5 years, you will be eligible for gratuity
2. If you are taken on employment on company rolls,you ought to get your gratuity. Nobody can stop this and say no to you.
3. If you are taken for a specific project as consultant/advisor, you will not be elgible for gratuity
4. You may take up this issue with your employer and the govt.authority
5. Write a simple letter to your company indicating the service details, period of work, etc., and seeking gratuity amount.
6. Wait for a reply - may be 15 days
7. If there is no reply or a 'no' comes from your ex.employer, you may write a letter to the Gratuity Authority (Asst Labour Commissioner of your area) with a copy of the letter written to the company. In case the company is covered under Central Gratuity authority, there will be a different office controlled by Central Government for Gratuity in your area (take an acknowledgement from the office)
8. The gratuity authority will send a notice to the company based on your letter and calls for records and will do the needful.
Hope this would suffice.
Regards & all the best,
I Worked for an leading IT service company in Bangalore for 5 yrs 9 mos and i'm in notice period now. After 3.5 yrs in India , I was transferred to U.S on work permit with the same company and returned back to same India Company after 1.5 years. In My India CTC also include Gratuity.
My company policies state, only India service is considered for Gratuity. I think I will also be not paid Gratuity though I served the company for close to 6 years.My relieving letter states continuous service for 5 yr 9 mos.
Im not sure if this Gratuity is completely governed by Govt. Labour laws or Partially influenced by Companies. Because some companies even pay for 3 years of service.
I'm completely amazed by my company policy for not paying me Gratuity after serving close to 6 years.I din't go to Onsite on my own wish or any vacation,
Please share your experiences and course of action.
From India, Bangalore
You are undoubtedly eligible for gratuity; you have worked for an Indian company and the company cannot make its rule to pay gratuity. As long as you are on the rolls of your company and unless your services are terminated, the company cannot say only for the period you have worked in India, you will be paid gratuity. Please clarify whether the work permit or transfer happened, keeping you on the rolls of the company or your employment was terminated and then you have been issued fresh letter? As long as it is a transfer, for gratutiy, it willbe continous service and company will have to pay gratuity. Remember, the Gratuity Authority is always there to help you !!
Under no labour law "365 days" is taken into consideration for ascertaining entitlement of any kind of benefit.
Please read your basic books on Labour Laws carefully.
From India, Mumbai