Saswatabanerjee
Partner - Risk Management
Korgaonkar K A
Ba,llb,mpm,dir&pm,dll&lw,d.cyber
Raj Kumar Hansdah
Shrm, Od, Hrd, Pms
Malikjs
Gm (hr)
+2 Others

Hi....

One of our Employee (DOJ) Jan 2002, was transferred to another group company to in the year July 2010 --- Completed 8.5 yrs

From July 2010 till Dec 2011 he was working the 2nd group company & then resigned from service without any intimation.----- Completed 1.5 yrs

In the 1st company his basic salary was @ 60% of the Gross Salary (Gross :- Rs. 8500), but when transferred to the 2nd company his basic salary was revised to 50% of the Gross Salary (Gross :- Rs. 12000) --- in line with all the 2nd company's other employees.

Suddenly he came back to claim his Gratuity amount. May pls suggest what method should be adopted for the Gratuity calculation :-

if we consider 50% Basic Salary for the 10 yrs of service, the employee would loose, whereas if we consider 60% of the Basic Salary, the company would loose.

it was suggested by my HOD, to consider Gratuity of 8.5 yrs @ 60% Basic Salary & for the 1.5 yrs @ 50% of the Basic Salary & make 2 different pay-out cheques from the respective companies

But as per the Gratuity Act, the same has to be payable as per the last drawn salary & from the company in which the employee was working on the last day...

Request to kindly suggest, so that neither the employee nor the company management is on the loosing side...

Thanks & Regards

M GUPTA.
14th January 2014 From India, Daman
Dear Mr Gupta
it is not the question whether employee will be looser or employer will be looser.it is the gratuity act which says it should be calculated on last basic.
now last basic was rs6000/- per month.please pay 10 years gratuity by showing 6000 as basic.
14th January 2014 From India, Delhi
Dear Gupta ji,
My view is as under:
When you used the word transferred, the employee is entitled to gratuity for 8.5 + 1.5 years.
Now the question is on what basic?
According to P G Act, last drawn basic pay is considered.. But you can not reduce the basic (and also gross). It is detrimental to his various benefits.
14th January 2014 From India, Mumbai
Dear Malik ji
I totally agree with your comments.
The Law can not be interpreted as per the Employer's whims and fancies.
Good to see you back after a long time. Do continue the good work.
Warm regards.
15th January 2014 From India, Delhi
I do not understand the question.
When the employee was working in the first company, the salary was Rs. 8500, Basic was Rs. 5100
When he went to the second company, salary was Rs. 12000, Basic was Rs. 6000
So, how does he lose by choosing the last salary ?
His basic is still higher than what he was drawing in the second company.
I hope you are aware that Gratuity is computed on last drawn wages, not to be computed for each year separately.
So he is to get gratuity on the basis of 10 years of service, at 15 days for every year worked, based on his last drawn salary.
Please also note that in working out the per day rate, you divide the monthly salary by 26 not by 30.
15th January 2014 From India, Mumbai
Hi,
In my opinion, he is not entitled to receive his gratuity unless he quits the job. BECAUSE : the word "transferred" has been used for change of Company, which means that the employee is continuing with the same employer but posted at a different station.
So, unless his services are terminated for whatever reasons, he should neither claim gratuity nor should be paid.
Now to the question of computation of gratuity. Gratuity is calculated on last pay drawn which includes Basic pay + DA. If there are two separate employers in both the companies, he is eligible for gratuity from 1st Company for 9 years (if service period is more than 8 years 6 months). Since he is continuing in 2nd Company, he is not eligible to claim gratuity from there.
AK Jain
16th January 2014 From India, Jabalpur
Dear Mr. Rajkumar,
I am extremely sorry for the error. Thanks for your valuable advise. I welcome your suggestion. However, my contention that if the companies (1) & (2) belong to same employer/group, the employee shall be eligible for 10 years gratuity and if not, for 8 or 9 years (if part of the year exceeds six months) holds good, isn't it. Pl advise/comment.
Thanks once again.
AK Jain
17th January 2014 From India, Jabalpur
Dear Arun
Thanks for your response and taking the matter positively !!
Since its a case of Group companies, (and continuity of employment), the service for the purpose of gratuity should be reckoned as 10 years.
For example; if an employee of Coal India Ltd. is transferred to other subsidiaries during his career, (his Personnel File and records will be transferred from one co. to another) and he will be entitled for gratuity for the total length of service. Isn't it ?
Warm regards.
17th January 2014 From India, Delhi
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