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R.N.Khola
Labour Laws & Ir
Sts.001
Regional Hr
Tikaramchaudhary@sify.com
Client Relation Manager To Actuary
Abbasiti
Assistant Engineer, Indian Telephone Industries,
V. Balaji
Ir & Hr
Garimap
Service
Kprabhash
Employee Counselling
Nandishpoojary
Hr Executive
Pnwarke
Training & Development
Satiya Raj
Hr Manager
+7 Others

Dear Sir,
Can you please let me know the rules of Gratuity & the sections pertaining to gratuity.
In my case I joined the organisation on Feb 2006. In another 3 months i'll be completing my 5 yrs of service. Since i've got a offer and i need to leave the organisation hence guide me whether Gratuity is applicable.
Regards,
Sapna
29th November 2010 From India, Bangalore
Dear Friend,
If you complete 5 years of service you will be entitled for Gratuity payment. Hence before taking any step think once aganin. Anyhow you have decided to leave the company, my advice is wait unitl eligible for gratuity.
This is only advice decision is yours.
I wish you all the best.
29th November 2010 From India, Hyderabad
Dear Sapna,

In addition to my friend Telikepalli's reply, I shall give the details on calculation of Gratuity.

For gratuity calculation, the formula is Number of years of service x last drawn salary x15 /26.

1. Number of years of service : If the service comprises of completed years and a fraction of year, the fraction has to be rounded to full year. i.e. If the fraction is 6 months or below, it will be rounded down. And if it is above six months, it will be rounded up.

2. Last drawn salary : Practically it is advisable to take average salary of preceeding twelve months.

For eg : Let the service as 5 years and salary as Rs. 26,000.

Gratuity calculation is = 5 x 26000 x 15/26 = Rs. 75,000.

Note : Now the ceiling limit for gratuity is Rs. 10,00,000. But if employer wish, he can give above Rs. 10,00,000. But as per section 10(10) of Income Tax Act, tax exemption is limited to Rs. 10,00,000. After 5 years if you continue for 6 months and one day in service, you will be eligible to get 6 years' gratuity.

Abbas.P.S
29th November 2010 From India, Bangalore
Sapna
As per the Gratuity Act, one has to complete 5 years of service to be eligible for gratuity. You said that you have completed 4 years and 9 months.
As this juncture, if you leave your organization, you are not entitled to receive gratuity. It is upto you to postpone your decision of changing your job.
V. Balaji
30th November 2010 From India, Madras
Dear Sapna You are eligible for gratuity. As per Gratuity act, you have completed 4 years + 240 days (9 months) to become eligible for gratuity.
30th November 2010 From India, Mumbai
Dear Sapana,
I would like to inform you that if you have completed 4 years and 9 months in the job, you will be entitled for the gratutity becoz the as per the act there should be continuation of service for 5 years and for computation of continuation of service if in the fifth year if you have worked for 240 days you are entitled no need to completed five years. Once u complete the 240 days in the fifth year of service you will be entitled for the gratuity provided you have workerd in continuation since joining the organisation and there is no break. So many people have confusion about completing five years but have to read section with definition of continuation service.
Hope this have clear you doubts and if have good opportunity can move ahead in life without worrying about gratuity.
If any queries can revertback to me
Raj Ambalia

Sr. Officer (HR & ADM) Mother Dairy, Gandhinagar
30th November 2010 From India, Ahmedabad
Dear HR Colleagues, In fifth year an employee has to complete 240 working days for eligibility of gratuity, not merely 240 days. Regards,
1st December 2010 From India, Kakinada
Hi Sapna,
This is in reference to your queries regarding entitlement of Gratuity benefits towards your tenure of services as you have completed 4 yrs and nine months as of now, I like to clarify that your service should be in continuous till date and as far as fifth year is concerned, it requires completion of 240 days working during the year then it will be considered as continuous service for fifith year which is taken into consideration for entiltement for gratuity. So if you fulfil the above ,you are entitled for the gratuity.
Thanks,
Prabhash Kumar
IDFS Pvt. Ltd., Gurgaon
1st December 2010 From India, New Delhi
Hi Sapana
Replies given to your query by other collegues are perfectly in order. I would liketo one more dimension that pl check your CTC calcualtion given by employer, if it includes gratuity, employer should pay you proportinate amount of gratuity as ex-gratia.
Ravindra
1st December 2010
Dear Sir/ ma’am what r the forms we have to fill for epf and esic when we join any new company as well as tell me by which no forms we can withdraw our epf. Waiting for reply Regards Deepti
10th May 2011 From India, Gurgaon
Dear Friends
Plz guide me
If basic is more then 6500 in this case pf is applicable r not.
Our UP skilled rate is 3290+1979(5269) basic + VDA,
my question is if this amt above to 5269 so how can I bifercate asper Law?
With Regards
Alka Singh
26th July 2011 From India, Delhi
Dear Member,
We are to follow definition of wages as provided by sec 2(s) of Payment of Gratuity Act, 1972 which may be read as under.
Sec. 2(s) "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.
Regards,
R.N.KHOLA
www.skylarkassociates.com/
4th September 2011 From India, Delhi
Dear Sunil,

If your establishment is covered under the P G Act, 1972 then your query relates to sec.7 of this Act, relevant portion is reproduced hereunder for your ready reference.

7. Determination of the amount of gratuity.—

(1)A person who is eligible for payment of gratuity under this Act or any person authorised, in writing to act on his behalf shall send a written application to the employer, within such time and in such form, as may be prescribed, for payment of such gratuity.

(2) As soon as gratuity becomes payable, the employer shall, whether an application referred to in sub-section (1) has been made or not, determine the amount of gratuity and give notice in writing to the person to whom the gratuity is payable and also to the controlling authority specifying the amount of gratuity so determined.

[(3) The employer shall arrange to pay the amount of gratuity within thirty days from the date it becomes payable to the person to whom the gratuity is payable.

With Regards,

R.N.KHOLA I I LL & IR I

Skylark Associates I Gurgaon I Haryana I

Welcome Skylark Associates

10th October 2011 From India, Delhi
Greetings of the day .....!!!!!
Here is the link where you can find all about Gratuity in a very easy to understand language for fresher like me.
All you want to know about gratuity
19th July 2012 From India, Gurgaon
Dear All,
Can you help me in guiding for getting gratuity amount from my pervious organisation.
I worked in an organisation for 5 years and the organisation refused to give my gratutiy amount. I joined on 01.05.2006 and resigned on 14.05.2011. The organisation says that according to sec 2(a) of the Act , the employees should have continuous service of 5 years. Since I joined on 01.05.2006, I am not qualified to get the gratutiy benefit for the year 2006. Subsequently, I resigned my job on 14.05.2011 and had not put up the required number of days in the particular year. Therefore my total number of years of service is only 4 years. Is this correct, kindly help me
Thanks,
Shanthi
25th July 2012 From India, Pondicherry
Hi Everyone,
Thank you for such valuable and relevant answers.
I wish to know, whether any employee completing 5 years with an organization is eligible for Gratuity or there is a compulsion that PF is deducted from the person's salary. Has gratuity anything to do with PF deduction??
I look forward to your response.
Thanks and Regards,
Harvinder

2nd August 2012 From India, Delhi
Hi,
I also have the same query regarding Gratuity as of Sapna.
My employer has refused to pay me Gratuity. However i have completed 4yrs 9 mnths (continuous service).
Please guide me how can i claim my gratuity.
Regds,
Charu
7th September 2012 From India, Delhi
Dear Sir,
I have been asked the following questions my interview
While separation (resignation) of non-management (union)employees form their employement, for calaulation of gratuity, dearnees allowance was considered. But for Management cader, dearness allowance was not considered for calculation the interviewrs asked why?
I replied that as per Industraial dispute act, DA constitute a part of wage. So DA was considered.But Management cader, they are not covered under ID act
Beyound that, where as in case of PF, why DA was attracting for claculation of PF. but why management cader DA not considered for calculation.
I replied that it depends up on company policy.
Regards
Benison
8th September 2012 From Switzerland, Langenthal
Dear Friend,
Our friends are elaborately discussed about the Gratuity Act.
However pls note that 4 yrs and 240 days( 5th year) will be applicable for gratuity in Tamil Nadu only ( pls refer Mettur Judgement given by the Madras High court.)
In other states, you need to complete 5 yrs of continuous service.
S Rajasekaran

8th September 2012 From India, Madras
Dear Colleagues
In furtherance to the discussion, if an employee completes 5 years of service ,elgible for gratuity. right but gratuity will be paid for those number of years, in which the employee attends 240 days. suppose during five years of service, if the employee does not attend 240 days in one year, gratuity will be paid for 4 years only.
I hope you understand my point.
Thanks and Regards.
10th September 2012 From India, Kakinada
Hi, Regarding Gratuity i want to know if a company shut down it operation within 5 year of operation is employee is eligible for gratuity in full and final payment
10th September 2012 From India, Mumbai
1) Fill form no. 2 to become PF member
2) Fill form no. 13 to transfer your PF
3) Fill form no. 19 & 10C to withdraw your PF & Pension fund
In case of ESIC you will have to make online ESIC registration at their site esic.in
after filling all necessary details u will get an IP number whicn will be unique for every one.
Regards,
Prashant (HR)
6th November 2012 From India, Mumbai
Dear Members and Experts. I want to know what are the rules and regulations for the Gratuity payment in Educational trust. Gautam.
7th November 2012 From India, Visnagar
#Anonymous
Dear Sir,
I am woorking in XXXX company . 14.03.2008 i was joined inthe company. now i want releve the company but my company says min 5 years required for gratuty. Please help me to releve with gratuity.....
regards,
BABU
10th December 2012 From India, Chennai
Dear Sir,

The write given below may help you to understand the requirement of actuarial valuation services in compliance of AS-15 (Revised 2005) under various employee benefits plans such as Gratuity, Leave Encashment , Pension, etc. :-

Accounting & Disclosure for Employee Benefits in Compliance of Accounting Standard (AS) 15 (revised 2005)

--------------------------------

Accounting Standard (AS) 15 (revised 2005) is issued by the Institute of Chartered Accountants of India and is mandatory in nature (refer to the text of the standard for details).

The objective of the standard is to prescribed accounting and disclosure for employee benefits. The statement requires an enterprise to recognize:-

A liability when an employee has provided service in exchange for employee benefits to be paid in the future; and

An expense when the enterprise consumes the economic benefit arising from service provided by an employee in exchange for employee benefits.

Employee Benefits fall under 2 type of plans:- Defined Contribution Plans and Defined Benefit Plans.

Employee Benefits are further classified as:-

Short Term Employee Benefits

Post Employment Benefits such as Gratuity, Pension, Other Retirement Benefits, Post-Employment Life Insurance and Post-Employment Medial Care;

Other Long-Term Employee Benefits, including long-service leave or sabbatical leave, jubilee or other long-service benefits, long-term disability benefits and, if they are not payable wholly within twelve months after the end of the period, profit-sharing, bonuses and deferred compensation; and

Termination Benefits

Because each category identified above has different characteristics, this statement establishes separate requirements for each category.

Accounting and Disclosure requirements for Defined Benefit Plans need the skill of an Actuary.

Most common Defined Benefits relevant in the Indian context which need the services of an actuary for compliance of the accounting standard, whilst finalizing the financial statements are:-

Gratuity

Compensated Absences (Earned Leave)

Compensated Absences (Sick Leave)

Post Retirement Medical Benefits

Superannuation (Pension Benefits)

Frequent items to be conversant with the subject are:-

Projected Unit Credit Method (PUC)

Present Value of Obligation

Current Service Cost

Interest Cost

Actuarial Gains/Losses

Employer’s Expense

*We provide actuarial services for compliance of the standard. We have expertise, experience and in-depth knowledge in this field. We have a large clientele spread in almost all sectors of the economy in Public and Private Sectors including Multinational Companies, Limited Companies, Schools, Hospitals, Banks, Electricity/Power Companies etc. etc.

Our services are also available for compliance of :-

International Accounting Standard IAS (19) – IFRS, NAS-14 (Nepal Accounting Standard)

Under US GAAP

For more details you may visit our website www dot mlsodhiactuary dot com
15th January 2013 From India, Delhi
Get End to End Support Services for Formation of Gratuity Trust
We offer end to end online/offline paid support services for the formation of gratuity trust. Our Services includes:-
1. Specialized Support Services for preparation of Inputs for Actuarial Certificate for Value of Obligation under the Gratuity Plan to be taken from an Actuary. This Certificate forms the basis for Initial contribution to be made by the organization into the Gratuity Fund.
2. Support Services in preparation of a board resolution to be passed by the Management of the company for formation of Gratuity Trust.
3. Analytic Support for Management of the Company to take the decision about Investment of the Self Managed Gratuity Trust Investment to be Self Managed by the Trustees or It will be any Investment Service Provider.
4. Advisory Services for Investment of Gratuity Fund into Group Gratuity Schemes.
5. Legal Support Services for Drafting Trust Deed and Trust Rules as per Income Tax Rules 1962.
6. Support Services for filing an application in IT Department for Approval for the purpose of tax exemptions upon the funding as well as the interest portion.
For more detail contact us at 9211637063 or send your queries/ requirement at my email ID -
7th June 2019 From India, Delhi
Hi All!
I thought you might like to read my new article:
Retention Incentive to Employees - A win win situation for Employers and Employees
26th June 2019 From India, Delhi

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