For the gratuity calculation, the years of service are rounded off to the nearest integer. It means if you have completed the 7 years 7 months in the service, the length of service for gratuity calculation would be 8 years. Similarly, if you have completed the 9 years and 5 months, the period for gratuity calculation would be 9 years.
$$$ According to the law for gratuity calculation your salary will include only the following component:
Dearness Allowance (if any)
It means HRA, bonus, special allowance and reimbursements are not taken for the gratuity calculation. Now you know, why the private sector employers try to keep basic salary low.
Now related to the applicability, if you have served for 5 or more years (4 years and 240 days in the last year) you will be entitled to gratuity.
Gratuity is to be paid on Last drawn wages (Basic+DA) by 26 x 15 days x no of years.
Service of 4yrs and 5months will not entitle to payment of Gratuity as per the provisions of The Payment of Gratuity Act, 1972. The CTC structure generally prevalent in most companies includes Gratuity as a standard component as it is calculated as 4.81% of the Basic Salary.
As I understand from your post, your HR person must have fixed your CTC as per the standard structure without considering your maximum service period upto retirement age. I would suggest that you put it in their knowledge and request for CTC restructuring on these grounds. You can mail to the concerned HR Executive who has finally negotiated CTC with you and mark a copy to HR Head also. Most probably they will be considering the facts positively and adjust the amount under the head in some other component.
Jaspreet Singh Janeja
There is a good chance you will not get that money because you are not eligible for it.
There is little you can do except request HR to change your salary structure since you will not be eligible for gratuity
First of all CTC is a COST TO COMPANY Which is internal working but informed to the employee. But which is not having any legal authenticity.
The policy of CTC differs employer to employer.
for example, any statutory changes implicated by the government, the few employer adjust the same liability in CTC bracket and do not take additional burden on them. Such confirmation they takes at the time of appointment or yearly increments from the employee, say EPF-ESI contribution % , threshold limits increases, HRA, medical norms etc.
Similarly, some where it is observed, the Salary structure is agreed on the basis of IN HAND. Under the circumstances employer/company bear the additional burden.
The indirect benefit mentioned in CTC are mostly on the present laws. Whenever any changes arrived in Law, the burden of the said liabilities goes on employer as well as employees as per the changes.
Indirect costs mentioned in CTC are due and payable only if fits in Law. in other words, if it is not due, then not payable even though mentioned in CTC.
HENCE IT IS VERY IMPORTANT UNDER SUCH CASES - THE UNDERSTANDING BETWEEN EMPLOYER AND EMPLOYEE.