Dear Friends,
We (around 40 members) have been working for a company called Exterran Energy solutions Ltd. Chennai. Company is closing down, due to somereasons, after completing 2.5 years. We have been retrenched. Gratuity was shown as part of CTC in our empl offer letter. Are we eligible to Gratuity?
Could any one reply immediately, tomorrow we have a session with company.

From India, Hyderabad

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Gratuity is is the reward by an employer to employee for long tenure ( 5 years ) continuously in his organization
Once a company closes down then Gratuity Act provision would not be attracted as 05 yeas of Continuous service would not be met.
So Gratutity for those who have not completed o5 years of service.

From India, Pune
Industrial Disputes Act, 1947
25F. Conditions precedent to retrenchment of workmen
No workman employed in any industry who has been in continuous service for not less than one year under an employer shall be retrenched by that employer until-
(a) The workman has been given one monthís notice in writing indicating the reasons for retrenchment and the period of notice has expired, or the workman has been paid in lieu of such notice, wages for the period of the notice; 1[* * * * *]
(b) The workman has been paid, at the time of retrenchment, compensation which shall be equivalent to fifteen daysí average pay 2[ for every completed year of continuous service] or any part thereof in excess of six months; and
(c) Notice in the prescribed manner is served on the appropriate Government 3[for such authority as may be specified by the appropriate Government by notification in the Official Gazette].

From India, Pune
If gratuity is part of your CTC, they should pay the amount. The closure is not due to the fault of employees. Pon
From India, Lucknow
Dear Sir, I would not agree to your statement because if otherwise company was running the employer had to pay Gratuity as per act. But in the said case Gratuity would not be applicable.
From India, Pune
For example, in my CTC the percentage towards gratuity is held and payable after 5ys in case of separation. When the company closes its operation, I should get back the money held on this account as I am not at fault. I don't know what the law prescribes in this situation.

From India, Lucknow
As per your logic you are right but with reference to principles of Interpretation of Statutues If the Statute is unambiguous then no one add any word / delete any word from the Wording of Statute for covenient interpretation
From India, Pune

I am not an Labour Law specialist but I am a HR(Generalist) still I have some knowledge of what your are saying,

we had this problem in our company but we took a decision in the employees benefit, we dont deduct any Grautity from employees salary, the provision for the same is to be made by the company as a reserve, all the fund which were hold were reversed back to employees, and now Gratuity is not a component of employees payable salary though it is cost to company and maintained as reserve by the company with LIC.

You are right we as employees suffer when we dont complete 5 years because the Grautity is not applicable to us, we loose the money.

Including Grautity in CTC ( cost to company) is a wrong practise because Grautity is purely to be paid by the employer to his employee as a Gratitude for the long and mertorious services if you read the Grautity act, however we see that companies include Gratuity as matter of legal compliance.

In my view If you refer the meaning of Terms Wages / salaries in factories act you must be able to fight for your rights, the company has to return the provisions which are deducted from your salary as Grautity because it your money, and it was a component of your package.

since its a retrenchment you will additionally get all that is applicable as per rules.

From Germany
The most of the companies doing the wrong by making gratuity a part of the CTC. In this case employee is helpless if he doesnot complete the five years of service and has to lose amount equivalent to the grauity contribution each year.
Moreover if the company is honest in its approach, it can pay the separating employoee the equivalent amount as ' Ex-gratia'.
Puran Dangwal

From India, New Delhi
A tricky question.
As per the Gratuity act not payable.
But by showing in CTC in appointment order and if the amount is shown as deduction in every month in his salary slip or as an expense to company every month then a logical question will arise and it can be interpreted as an amount deducted from his salary so that they accumulated that amount then he (employer) is liable to pay that amount deducted as a part of his salary.

From India, Bangalore

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