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Thread Started by #saran01312

In our Establishment, We have started gratuity to our employee, Around more than 10 employees are 05 years,.. Kindly give a suggestions to give the details to the management & Employee,....ASAP reply meee.......
17th February 2012 From India, Madras
Hi Saravanan,
We give gratuity of employee after completing 5 years of service in the organisation.Gratuity is calculated on 15 days salary of last month salary drawn.Gratuity is calculated on Basic + DA.Maximum limit of gratuity is 3.5 lakh.
If person is dismissed for fraud or theft is not eligible for gratuity though he completed 5 years services but is should have specified in offer letter.
Following is the formula for calculating gratuity
Basic+DA/26 x 15 x No.of years service
No of years=7 yrs

Gratuity = 3500+2000/26 x 15 x7
Gratuity = 22,211.54
Hope information provided by me is useful for you.
17th February 2012 From India, Mumbai
You can calculate gratuity payable and all other details of all such employees and then present to the management. The formula to calculate is given by the other member is correct. Additionally, you have to calculate gratuity on the last drawn salary.
17th February 2012 From India
Dear Amol, The gratuity payable ceiling has been increased from 3.5 to 10 Lakhs. (Ref. Payment of Gratuity (Amendment) Act, 2010 (No. 15 of 2010), dated 17-5-2010)
17th February 2012 From India, Mumbai
Dear Amol,
It is not correcting, it is just an updation which you would have not come across.
Everyone here is to learn new things every day. Every day some amendments come which i may also don't know unless some member update it.
Happy learning
17th February 2012 From India, Mumbai
Hi : Talk to LIC of India they have a separate division for gratuity. They do a good job for getting a policy ready as well as managing the funds
18th February 2012 From India, Mumbai
Dear Sir, Gratuity is payable while leaving from service after completion of 5 years Service. You need not give to the persons working for more-than 5 years service. D.Gurumurthy HR/IR Consultant
18th February 2012 From India, Hyderabad
Dear Amol Ji,
You said you are giving gratuity to employees after completing five years service. May I request you to please explain this to me? Are you giving gratuity to the employees after completion of 5 year service even they are in service or only when they finally part with you? Gratuity is to be paid only at the time of leaving service permanently and not if a employee continues in service beyond 5 years. It is to be paid only once at the end of one's service and not during service after completion of spell of 5 years. I interpreted your words literally and have given this explanation. If you are already following this, please ignore this. Thanks & regards,
18th February 2012 From India, Pune
A small confusion in your line, sorry,, actual we started this year only to give gratuity to employees as per the payment of gratuity act. As per i need to prepare the gratuity policy and submit to management.So Kindly clarify or post any gratuity manual samples to prepare ASAP.
Keenly awaiting for reply?????
18th February 2012 From India, Madras
Dear Saravanan Ji,

Gratuity is payable only when an employee's services are permanently terminated due to resignation, retrenchment, incapacity due to accidental injury, death etc. While gratuity is payable after completion of 5 year service continuously, this condition of 5 year continuous service is not applicable if the employee dies while in service. Gratuity is payable in the event of death even if he has not completed five year service. For preparing gratuity policy for your firm, you may please study similar policies of public sector undertakings like Food Corporation of India, nationalized banks, co-operative banks etc. They have established policies. You may adopt them with suitable changes. Some employers now resort to gratuity policies of Life Insurance Corporation of India. They pay periodical premium to the LIC. When gratuity becomes payable to some employee, the LIC meets the liability. You may contact nearest LIC office and get more details from them.

Thanks & regards,
18th February 2012 From India, Pune
Hi Shyam Agrawal, Fine & thanks for your valuable information.Also update the procedure, i want to do in the policy making & Some more suggestions. Regards, Saravanan.M
18th February 2012 From India, Madras
Dear Neha,
Greetings for the day,
It may be noted that above calculation is 100% true, it is also true that gratuity is calculated on last drawn salary but only component of basic+da should be consider and rest all other component of wages should not be taken. Last but not least the working days for each year should be 240 days, not less than that.
thanks & regards,
sumit kumar saxena
18th February 2012 From India, Ghaziabad
Dear Shenbagarajan,
I am from Maharashtra.Today morning i read a news on front paper of Marathi Daily ,Divya Marathi .The news is as "Gratuity eligibility will change to Three Years From 5 years and if Employee changes the employement after three years of service then it is the responsibility of The existing employer the transfer the amount of gratuity to new Employer. I realy got surprised from this news,but Divya Marathi is the best marathi news paper in Maharashtra as per my knowledge.Is Govt to amend PAYMENET OF GRATUITY again ?
All seniors plese check with all posibility and post your findings.
Mangesh Wakodkar

19th February 2012 From India, Pune
HI... I am confussed if anybody completed 07 yrs and he want left the orgnisation then what he will get gratuity or not ? Pl clear my doubt. Regards Prakash M
20th February 2012 From India, Mumbai
Dear Mr. Saravanan
LIC calculates the amount to be paid or deposited based on the length of service, salary, retirment age etc of the employees. Certainly it is beneficial to both managment and employees. Full gratuity is insured and will be paid in case of death of an employee while in service. Then management can avail income tax rebate on the amount deposited with LIC.
20th February 2012 From India, Ernakulam
Dear Prakash Ji,
Why confusion ? It is simple. The employee would get gratuity for 7 years service @ 15 days salary for each completed year @ last pay + dearness allowance admissible; in the formula 7*(Pay+DA)*15/26.
20th February 2012 From India, Pune
HI What is the eligibility to get gratuity amount? Termination person can get the amount if he/she completed five years means!!!!!!!!!!!!!!!! Regards, Saravanan.M
15th March 2012 From India, Madras
Dear Saravanan Ji,
More than 5 years' continuous services with honesty is the eligibility criteria for payment of gratuity. If the termination is on the ground of dishonesty or misconduct (removed from services on these grounds), then gratuity is not payable.
16th March 2012 From India, Pune
Dear Friends,
My company has plan to give gratuity to employees on this year onwards. We already registered for Shops & establishments act, but for gratuity we have to register or not. We plan for LIC to Tie up for gratuity group scheme. But also we need other than LIC, manually(i.e.,In Full Final Settlement, Separately Cheque or Cash) if we will give gratuity amount to reliving employees means any constraints is there or not. We under the Tamilnadu Shops & establishments Act.
Awaiting for your reply!!!!!!!
Thanks & Regards,
21st March 2012 From India, Madras
Dear Saravanan Ji,
I would suggest you to please contact nearest LIC of India office for gratuity policy and study their terms and conditions before you take a final decision in the matter. That will help you take a good decision. Thanks & regards,
22nd March 2012 From India, Pune
Some additions to your post:
1) In case of death the amount can be paid, irrelevant to the tenure of the employee.
2) Again the amount can be seized or forfeit in case of serious misbehaviour by the employee.
22nd March 2012 From India, Pune
Dear Mr.Agrawal
Please see section 4 of the Payment of Gratuity Act. Gratuity can be forfeited(this is the term used in the section) for the reasons specified in that section. Gratuity cannot be forfeited for any other reason.
With regards
22nd March 2012 From India, Madras
just a small correction sir.... Max ceiling is raised to 10lkhs.. and there is no maximum limit, its just that above 10lkhs it will be taxed..
25th March 2012 From India, Calcutta
Dear Mr.Soumik Mukherjee
The employer, if he is gracious enough can pay any amount as gratuity exceeding Rs.10 lakhs. The fact is that under the Payment of Gratuity Act the employer cannot be compelled to make make payment of more than Rs.10 lakhs as gratuity. Authorities appointed under the Payment of Gratuity Act to decide disputed claims do not have the authority or power to award more than Rs.10 lakhs as gratuity.
With regards
25th March 2012 From India, Madras
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