Honeyanshi
Vice President (hr&ir)
TIKARAM CHAUDHARY
Gratuity Fund Formation Consultant
Piyu.soul
Payroll Executive
Nathrao
Insolvency N Gst Professional
Roopali K
Hr Manager
+1 Other

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Today on dtd. 29.11.2017 want to discuss issue regarding Gratuity & Leave Encashment as a part of CTC.
Many Employers now a dayís includes Gratuity & Leave Encashment as a part of CTC. Itís a common practice. And due to this employee suffer low in hand salary. Some typical issues every employer must think before making CTC.
GRATUITY
1. CTC means Cost To Company. Whether it is Ethically Correct to include Gratuity in CTC before first 5 Years of Employment.
2. Some employerís plea that Gratuity is also a cost to company, since it is included in CTC. As if it is a part of CTC then if employees resigns before 5 Years or 4 Years 240 Days then arenít employer is forcing employee to give up their hard earned money.
3. In India if we go through the Turnover (Job Switch) rate of employees it was 26.9 in 2013 and expected to go up further 27.5 in 2014 and will grow in coming years. (India in the eye of an employee turnover storm: Survey | Business Line)
As per Turnover rate we can assume that how much money is held with employer as Gratuity Till Date.
4. Is not the time now where we should have one unique no. for all employees for Gratuity by Labour Department? Whenever employee switch job Gratuity Fund of an Employee should also be Transferred from Old to Current Organisation.
Will this step lead to well being of working class?
LEAVE ENCASHMENT
5. Taking Leave Encashment as a part of CTC, Employer shows their concern about employees as it is like their Bonded labourer and employee does not need any time for his family and society.
6. Employees Earn their Leave as per provisions in Factory Act and Employer have no right to make it as a part of CTC. As it is earned by employee.
7. Leave Encashment as a part of CTC lowers in Hand Salary to Employees. And it is a trick Employers make for their own benefit.
8. Whenever Employer pay Leave Encashment calculation made is on Basic & DA. But when it comes to deduction for Leave Without Pay then Employer deducts it on Monthly Gross Salary is it justifiable.
As if now time has come where Employers should think Ethically on both the issues. I welcome your precious thoughts in this regard.
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CTC concept applied in 2004 when FBT came in existence ... to win -win situation for employee and employer... otherwise tax liability from 8% to 32% on employer...by showing in CTC , lesser % to be paid by employer.
But 2008 or 9 , this Fringe benefit tax revoked...so there after not much use of CTC... only help employer to know total cost of employee for them.
In this concept, employee bargain on calculating all those implication.
You can't stop employer from using concept of CTC. Since CTC does not come under purview of any labour law & is agreed by employee, you have no remedy in the matter. Leave payment is cost-to-company, it is morally not correct include cost of gratuity as it will be loss to employee, should s/he quit the org before completing 5 years of service. But what is the use of agreeing before & then raising query, if not dispute?
Sir,
According to me, if an employer make the gratuity as a part of CTC, then employer should be liable to pay the deducted amount before completing 5Year as a taxable Income. but on the other hand your proposal is also good if it goes to handle by Govt. like PF.
Dear All,
This is to let you know that Gratuity term is derived from the Latin term gratitude which means to provide in lieu of gratitute. Definitely POG act is one of the labour laws in India.
he act state to provide a lum sump amount to eligible employees at the time of seperation alongwith his F&F settlement.
Would like to state that here have many case verdict in favour of employees who have rendered 4.6 yrs of continuous services and have been paid the gratuity.
There are two options first is that the eligible employees are settled with the gratuity amount at the maturity company doesn't mark it as apart of Emloyees CTC.
Secondly there are the companies who are making provision of gratuity link with LIC plan. So there are deducting 4.81% of the basic from Employees CTC .
Now the question arises that if the employee has given his consent and hd acknowledge the offer.Then there doesnt arises any litigation.
With Thanks & Regards
Bhagat Singh
Asst. Manager -Corporate HR
Dear All,
If XYZ company Employer says , he is been paying Gratuity every month to all the Employees as the salary is based on CTC ( but in CTC as structure also no where is mention as 4.81% Deduction of gratuity ). The company has not maintain any prodata also if it is paid every month.
I know Gratuity is paid after resigning the company and applicable after completing 5 years with the company .
How can a employer justify that he has paid the gratuity in salary & is it legal paying the Gratuity while on service, secondly can the Employer deduct the paid contribution in every salary while clearing the Gratuity.
Dear Sir,
As discussed with you couple of times , that the Employer is been paying Gratuity every month to all the Employees as the salary is based on CTC ( but in CTC as structure also no where is mention as 4.81% Deduction of gratuity ). The company has not maintained any pro-rata also if it is paid every month.
I know Gratuity is paid after resigning the company and is applicable after completing 5 years with the company.
How can a employer justify that he has paid the gratuity in salary, & is it legal paying the Gratuity while on service, secondly can the Employer deduct the paid contribution in every salary, while clearing the Gratuity to the Resigned Employee.
Is this all legal.
Dear Bhagat Singh Ji,
Asst. Manager -Corporate HR
As you have written
"Would like to state that here have many case verdict in favour of employees who have rendered 4.6 yrs of continuous services and have been paid the gratuity."
Have you gone through any verdict where after 4.6 Years of Continuous Service Gratuity has been paid. If so please give me details.
Thanks N Regards
Salaries in our country are quoted in terms of CTC or cost to company. CTC is Just the cost that the company incurs to employ you and keep you employed. It includes your pay and anything else that the company may incur to keep you in employment. Itís important because a lot of components of your CTC may not translate into actual take-home cash every month.(kindly keep this in mind)
Employees should understand:
Certain components of CTC may not be cash components
Deductions further reduce monthly take home
Annualised and variable components(eg- include leave travel allowance(LTA), annual bonus etc.not part of monthly income)
""As per Turnover rate we can assume that how much money is held with employer as Gratuity Till Date.""
No money is held with employer, it is just figures for working cost of employee
CTC per employee is worked out to get employee cost figures and variations in actual payment take place when employee leaves w/o completing 5 years, the gratuity portion gets reduced from calculations.
Concept of CTC needs to be understood correctly to appreciate its purpose.
The employer doesn't want to pay the gratuity as per the government norms. But keeps saying that the employee has been paid gratuity every month in every months salary.
He has not maintain any prorata if he was paying.
Now he says if the person is applicable for Gratuity (4.6yrs/5 yrs ), he will cut the AMOUNT which he has been paid in salary.
Can he do that & is it legal.
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