Labour Law & Hr Consultant
Industrial Relations And Labour Laws
Gratuity Fund Formation Consultant
Sr. Executive - Hr
Insolvency N Gst Professional
Korgaonkar K A
Srinath Sai Ram
It's notional entry and debit, as it's future provision to pay the gratuity which is mandatory.
However. many companies doesn't pay to employees when he leaves before completing 5 years which is unethical.
How is it unethical.
Payment of Gratuity Act stipulates minimum 5 years continuous service for eligibility of gratuity to arise.
If you leave before 5 years of service question of gratuity does not arise.
In CTC concept part of employees committed CTC is kept aside from the very first month as a provision to pay him when it becomes applicable.
While negotiating with the employees it is been projected as his earning...which would be true only for employees staying with the company for more than 4.6 years.
Hope this clarifies.