S.VIJAYASIMHARAO
Human Resources
+2 Others

Dear Senior,
As per Gratuity Act, the gratuity is payable only after an employee completes five years of continuous service.
But Is it become mandatory for an employer to pay the gratuity to employee (who has not completed 5yrs) if employer is showing it as a part of CTC in appointment letter?
Please Help.
Regards
Manoj
23rd August 2011 From India, Mumbai
Hi Raju, The gratuity can be applicable even before completion of 5 years if the employee has worked in the organisation for at least 240 days in the fifth year. Regards Manoj
24th August 2011 From India, Mumbai
Dear team, i would like add that if the CTC is inlusive of gratuity contribution then it is paid as exgratia (taxable) if the service is less than 5 yrs or if it is over and above the committed CTC seperated employee is not eligible unless he completes 5 yrs of service with the company and he doesnt have right to ask. Regards/SVS RAO
24th August 2011 From India
Thanks Mr.S.VIJAYASIMHARAO, But is it mandetory to pay this exgratia amount ? is it mentioned in any notification. Please provide the copy if any. Please help. Rgds Manoj
25th August 2011 From India, Mumbai
Dear Sri Manoj,
The payment of ex-gratia is not mandatory if the Gratuity deduction is not part of CTC. However, if it is part of CTC as it is the money of employee, the employer releases gratuity amount by way of exgratia (by deducting applicable Income tax) while preparing F & F as a part of good corporate governance and nowhere it is mentioned in the Act, as per my knowledge. Now most of the corporate companies migrated to CTC concept (even by including employer contribution of PF Deduction).
If the committed CTC is not inclusive of Gratuity (4.88%) then the employee gets eligibility for Gratuity after completing 5 years of service with the company, as per payment of Gratuity Act and hope you might have gone through the latest amendments in Gratuity ceiling - ie. Rs.10.00 Lakhs, the amendment of which is already shared by our team members in our recent threads.
Hope, all team members agree with my above view.
Regards
SVS RAO
28th August 2011 From India
Sir,
I was working in an organization from 20th June 2007 till 2nd Feb 2012, would i be eligible for Gratuity? Also Gratuity was a part of my CTC in the organization. If yes how can i apply for the same?
Kindly revert asap if i have to do any formalities within 30 days of my last working day for it.
Please help.
Regards,
Sapna
10th February 2012 From India, Mumbai
The problem with the concept of CTC is that there is always a underlined message which says "Payable as per the provisions of The Payment of Gratuity Act" and there is no provision in the Act to provide any ex-gratia payment.
It is totally based on the policies of the company.
Regards
Preetam Deshpande
13th February 2012 From India, Mumbai
Dear Manoj,
Every company is projecting their cost of the employees annually in their budget, they show it in TCTC of employees appointment letter. There is no wrong in it. The company is working out gratuity for the allocation of fund. unless the employee has completed 5 yrs or more & resigns only he will be eligible for gratuity.
13th February 2012 From India, Mumbai
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