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Actually, it is a cost factor for the employer and so that they add it to the offer letter as salary break-ups.
Mr. Khanna has already cleared in his reply that if any employee leaves the company
before completion of the prescribed period the amount
of gratuity paid to the LIC
will be set off. That means
the empoyee who leaves the company before completing
five years period will not be eligible for the Gratuity payment, but the amount held by the LIC to this extent will be adjusted
in the following amount to be paid by the employer to LIC. Hope this is clear now.
Eswararao Ivaturi.

I have a query, if an employer does not add Gratuity as part of CTC and the employee has completed at least 5 years of service, and the employer has not made any contributions every year, then how do you calculate Gratuity? Will it be limited to the formula: Last drawn basic x no:of years of service x 15/26

Irrespective of the fact whether the employer makes contribution/ makes provision for Gratuity, if the employee completes the eligibility period of 5 years (now companies pay if the employee completes 4 years of service and 240 days in the 5th year) the employer has to pay Gratuity as per the provisions stated by you.

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