BrainLight HR Solutions

Dear Bijay

Take below as example for your understanding: (increment is done in basic salary every year)

1st Year- Basic Salary (p.a.) = 84000 - Gratuity Shown in CTC = 4040.4 (i.e. 4.81% of Basic Salary)

2nd Year- Revised Basic Salary (p.a.) = 96000 , Gratuity Shown in CTC = 4617.6

3rd Year- Revised Basic Salary (p.a.) = 96000 , Gratuity Shown in CTC = 4617.6

4th Year- Revised Basic Salary (p.a.) = 108000 , Gratuity Shown in CTC = 5194.8

5th Year- Revised Basic Salary (p.a.) = 120000 , Gratuity Shown in CTC = 5772

6th Year- Revised Basic Salary (p.a.) = 132000 , Gratuity Shown in CTC = 6349.2

Last drawn basic was 11,000 p.m. hence Gratuity calculation will be done as (11000/26) X 15 X 6 years = Rs. 38,077/-

Gratuity is shown in CTC or not shown in CTC is irrelevant, if employee has worked 5 year and above then it is applicable while separating from the employment. (To claim Gratuity employee can fill-in FORM-I as per Gratuity Act, in case of death employees nominee can claim gratuity under FORM-J)

Its mandatory by law, hence question doesn't arise if it is shown in CTC or not shown in CTC.

HR Department

BrainLight HR Solutions

From India, Mumbai

Yes Mr. Subbarao
It should be 4.8% of basic plus da, not gross. I neglected to mention that. My appology to members for that.
However, if the intent is to show actual cost to company (as against the normal purpose of making a fool of candidates), then we need to actually have a model of how the gratuity liability increases with increase in salary and add that to annual ctc.....

From India, Mumbai

Dear Mr.Sharma,
The exact calculation is Last Basic / 26 x 15 days per year x length of the service = Total amount payable to a person who is leaving the service.
Eligibility criteria is :: completion of service beyond 5 years 1 day.
Last basic : Basic salary at the time of resignation
If a person works beyond 6 months after eligible limit, he is eligible for 6 yrs if it is less than 6 months, 5 years will be taken as eligibility.

From India, Hyderabad

Dear Members,
The basic question was confusing... the actual required information for Mr. Sharma was monthly % of Gratuity. It is 4.8% on Basic + DA (in few company's there is no DA funda for management staff). If total is is shown as Basic, we should calculate on the same as 4.8% but this does not arise. Generally we will show this component in CTC statement while computing for increment letters / issuing appointment orders. Even this 4.8% will be taken in budget while computing the co's budget along with leave wages(all these will be furnished to Accts through HR Dept).
I am also sorry that the settlement of Gratuity was mentioned by me.

From India, Hyderabad
Hello BrainLight, Culd you pls share calculation/formulae for contract workers ? is it same or there is different measurment for calculating gratuity for contract workers ? Thanks Karuna
From India, Noida
So is there any validity if an employee tells a fixed-term contract employee working full time that they are not eligible for gratuity because they didn't have any salary breakup or statutory deductions?
From India

Merely because the employee draws a fixed salary and there is no salary break up or statutory deduction, gratuity liability is not exempted. Gratuity is a legal right conferred by the Payment of Gratuity Act 1972 and if there is an entitlement as per the statute, it has to be paid, there is no escape from it.
From India, Mumbai
I just realised a giant shake-up that the company has done overnight most probably to deal with tax officers over who is who in the company.
I was called up a few months back just before renewal of the annual contract and told to immediately print and submit a document sent to me failing which my salary would go on hold.
Until now, there has only been a formality for the sake of it of "renewing" contracts which practically happened automatically and for the sake of paperwork, they used to ask us to sign a paper saying that the agreement signed this day is being extended for one more year.
The fine print in the latest letter I signed says (freshly added, never before in the preceding 9 years):
The consultant agrees that he is not eligible for any statutory benefits that accrue to employees pursuant to Indian Labour Legislation (such benefits, the "benefits"). Notwithstanding anything contained herein, the consultant further agrees to waive any rights to benefits that may potentially accrue to the consultant.
This after I have served 9.5 years in the company and overnight, EVERYWHERE, including the company's telephone directory, my email, everywhere the title under my name shows "Consultant" from the earlier "Senior Manager".
I seldom bother to check with HR as to what they ask me to sign or what papers they ask me to further submit because the company been pretty good at looking after its employees and has always ensured to give more than they are legally obliged to give. But after some recent turn of events and churning of top management, I really don't know what is going on.
I am reporting to a person and am working as any other employee. Senior Manager etc are just designations given on the basis of seniority and I don't have staff reporting to me or anything. Like we have about 12 odd people in our department alone, reporting to the HOD who sends monthly rosters showing people's leaves, timings etc. About 4 from this department are on "payroll" while the rest chose to just keep renewing their contracts.
I have NO independence whatsoever and I am obliged to obey my boss no matter what orders she gives just like to any other subordinate of hers. I can't choose to just say I won't do this or say I can't work today and take an off. Leaves have to be formally applied for in advance. I work full 9 hours (officially, but in practice it goes to 12 hours), five days a week.
I don't know what kind of tax evasion the company is trying to do but now it seems that when I am having to resign, I won't be given gratuity benefits. A person from human resource, rather than replying to my text, called me up and said there are no gratuity benefits to contract staff in an aggressive fashion without even letting me explain that gratuity is non-negotiable if the employee-employer relationship has been observed in practice irrespective of what fancy words you put on their letters.

From India

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