Hello!
I have been appointed as an HR Manager in an organization. I don't have any experience in HR as I am a fresher. My boss has asked me to look into the Gratuity issue of the employees. I know that Gratuity is to be paid to every employee leaving the organization having more than 5 years of employment with that very organization. Now, my query is out of which funds does an employee need to pay Gratuity? Do I need to tie up with an insurer to pay a monthly contribution for employees in the Gratuity fund head? Kindly help me out.
Regards.
From India, Srinagar
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I have been appointed as an HR Manager in an organization. I don't have any experience in HR as I am a fresher. My boss has asked me to look into the Gratuity issue of the employees. I know that Gratuity is to be paid to every employee leaving the organization having more than 5 years of employment with that very organization. Now, my query is out of which funds does an employee need to pay Gratuity? Do I need to tie up with an insurer to pay a monthly contribution for employees in the Gratuity fund head? Kindly help me out.
Regards.
From India, Srinagar
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Hello Usman,
I am not a legal expert, but I will share what I know. Your company needs to register under the Gratuity Act. Every year, the company should book gratuity funds based on actuarial values by the company's Chartered Accountant and input provided by HR at the beginning of the financial year.
Generally, gratuity is maintained at the corporate office. I hope this explanation is clear to you. I would advise you to go through the act to understand who is eligible for gratuity.
From India, Bhubaneswar
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138I am not a legal expert, but I will share what I know. Your company needs to register under the Gratuity Act. Every year, the company should book gratuity funds based on actuarial values by the company's Chartered Accountant and input provided by HR at the beginning of the financial year.
Generally, gratuity is maintained at the corporate office. I hope this explanation is clear to you. I would advise you to go through the act to understand who is eligible for gratuity.
From India, Bhubaneswar
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Dear Usman, Inputs are total employees, DOJ, current salary.
From India, Bhubaneswar
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From India, Bhubaneswar
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There is no registration under Gratuity Act.Employer has to pay gratuity from .Taking insurance for gratuity is his choice. Varghese Mathew 9961266966
From India, Thiruvananthapuram
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From India, Thiruvananthapuram
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There is a provision under gratuity act that every establishment must send a notice of commencement to the authority under gratuity act within 30 days of commencement of the organisation.
From India, Mumbai
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From India, Mumbai
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Usman,
There is no specific fund specified in the act from which gratuity is paid. Depending on the size of the organization, you need to create your own fund. You need to sit and work this out based on your conditions. If the business is large (and profit margins are good), and the number of employees working more than 5 years is low, you may not need a fund as the business can afford to pay gratuity to the few who leave. However, in order to ensure smooth cash flow and avoid disruption in case a large number leave at the same time, companies prefer to set aside some money for this. Ask your finance guys how they can do it.
Remember that anyone dying while in employment is entitled to gratuity even if he has not completed 5 years. Further, there is a provision in the act for compulsory insurance, which I think is for larger companies. You can get in touch with LIC or one of the private insurance companies and check out their schemes. You get some tax benefits also for putting money into these schemes.
In creating your fund, remember that gratuity is based on the last drawn salary. So, we need to reset the amount upwards every year.
From India, Mumbai
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There is no specific fund specified in the act from which gratuity is paid. Depending on the size of the organization, you need to create your own fund. You need to sit and work this out based on your conditions. If the business is large (and profit margins are good), and the number of employees working more than 5 years is low, you may not need a fund as the business can afford to pay gratuity to the few who leave. However, in order to ensure smooth cash flow and avoid disruption in case a large number leave at the same time, companies prefer to set aside some money for this. Ask your finance guys how they can do it.
Remember that anyone dying while in employment is entitled to gratuity even if he has not completed 5 years. Further, there is a provision in the act for compulsory insurance, which I think is for larger companies. You can get in touch with LIC or one of the private insurance companies and check out their schemes. You get some tax benefits also for putting money into these schemes.
In creating your fund, remember that gratuity is based on the last drawn salary. So, we need to reset the amount upwards every year.
From India, Mumbai
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Saswata Banerjee,
Yes, there is a provision in POG rules that every establishment shall send a notice of opening to the controlling authority. However, it is not registration. The controlling authority is not registering the establishment with a registration number. They are not issuing a registration certificate. Similarly, there is a notice of closure.
Varghese Mathew
9961266966
From India, Thiruvananthapuram
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Yes, there is a provision in POG rules that every establishment shall send a notice of opening to the controlling authority. However, it is not registration. The controlling authority is not registering the establishment with a registration number. They are not issuing a registration certificate. Similarly, there is a notice of closure.
Varghese Mathew
9961266966
From India, Thiruvananthapuram
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Gratuity will be paid after completion of 4 years and 240 days of fifth year. Govind Pawar
From India, Mumbai
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From India, Mumbai
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Sir,
I am an employee working in a PSU on a contractual basis. Regarding gratuity, I have a confusion. When can an employee claim for gratuity? Is a contractual employee also entitled to the benefit of gratuity?
Is it necessary to have 5 years of regular service to be eligible for the benefit of gratuity?
I worked for 3 years under a contractor, and after three years, a new contractor took over. However, the new contractor showed our joining date as one day later than the actual date. (The original date of joining should be 1st April, but he showed it as 2nd April.)
Is there any reason for this discrepancy? Are we still eligible for gratuity?
Thank you.
From India, Aurangabad
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I am an employee working in a PSU on a contractual basis. Regarding gratuity, I have a confusion. When can an employee claim for gratuity? Is a contractual employee also entitled to the benefit of gratuity?
Is it necessary to have 5 years of regular service to be eligible for the benefit of gratuity?
I worked for 3 years under a contractor, and after three years, a new contractor took over. However, the new contractor showed our joining date as one day later than the actual date. (The original date of joining should be 1st April, but he showed it as 2nd April.)
Is there any reason for this discrepancy? Are we still eligible for gratuity?
Thank you.
From India, Aurangabad
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HR Manual (Employee Hand Book).doc