Thread Started by #thakursumitmba

I want to know that if gratuity is a part of CTC then gratuity is payable at the time of exit or not.
service period 4 yrs. Please sir give the reply as soon as possible.
24th August 2018 From India, Dehra Dun
Answer in short is NO.
Gratuity is payable on completion of 5 continuous years of service.
Inclusion in CTC does not mean that you will get gratuity without completing minimum period as stipulated by law.
24th August 2018 From India, Pune
4years 240 days they are eligible for the gratuity
24th August 2018 From India, Ahmedabad
Hi
Just because some employer includes the term Gratuity in the CTC does not change anything as far as the applicability of the Payment of Gratuity Act. It will and shall remain the same with 5 years being the criteria in an employment continuously, subject however to the technical qualification of the last year if anyone resigns/retires/superannuates in the fifth year, in which case 240 working days comes into play.
Thanks and Regards
24th August 2018 From India, Hyderabad
When an employer includes Gratuity in CTC , he does not pay out the gratuity portion in the take home salary.In case he includes it then it is his problem as he is liable to pay Gratuity after due service .
Col.Suresh Rathi
24th August 2018 From India, Delhi
Statutory Gratuity is part of CTC and cost is allocated towards employee costs which is payable upon completion of 4 years 240 days. If your salary is being deducted towards gratuity then you can claim the same irrespective of your CTC.
27th August 2018 From India, Mumbai
Gratuity is a statutory right of employee whoever completes 5 years in the same organization, and is a terminal benefit. The cost is to be born by employer and not employee. Gratuity can not be a part of CTC. ...
27th August 2018 From India, New Delhi
All costs related to employee remains part of CTC and therefore, Statutory Gratuity is part of CTC, i.e. cost to company @ 4.81%. Gratuity along with other terminal benefits are also part of the total employee cost to the company. A Trust is created for Gratuity payments with LIC and monthly premiums are paid toward this fund and the cost is charged to the employee account.
27th August 2018 From India, Mumbai
"A Trust is created for Gratuity payments with LIC and monthly premiums are paid toward this fund and the cost is charged to the employee account.""
No part of expenditure on account of gratuity is payable by employee.
Having a gratuity fund with LIC is the company's look out for timely payment of gratuity as and when employees exit and are authorised gratuity.
27th August 2018 From India, Pune
CTC is the projected estimate of all the expenses to be incurred by the employer per employee in a year. Just because it is mentioned in the offer letter or appointment order, it doesn't mean that all the benefits mentioned therein should be paid to the employee who leaves the organization either on his own or otherwise unless he fulfills the conditions for their payment. Particularly, gratuity being a statutory benefit, its payment is strictly subject to the provisions of the Payment of Gratuity Act, 1972 which is a complete Code in itself on the subject-matter of gratuity as invariably suggested by all the learned members above.
28th August 2018 From India, Salem
Answer is Yes if he complete his gratuity eligibility period before leaving the job otherwise he will be not able to get gratuity.
Read this >>> <a href="https://www.sabkuchonline.in/2018/02/know-all-about-gratuity-hindi-gratuity.html">What is Gratuity Eligibility and other rules?</a>
Thanks
29th August 2018 From India, Delhi
Inclusion of Gratuity amount in CTC to employee's salary is not correct as per my knowledge
Please note that, the payment of gratuity is additional expenditure to employer as a part of social security benefit t employee.
However, employer has to keep provision towards payment of gratuity for having completing continuous service rendered by an employee.
But if an employee dies while working, the completion of five years will not come to picture and the payment has to be made to the nominee as per prevision.
To make more attractive package to employees, we people(HR) will create / add this amount in CTC is bad practice.
Someone has suggested to cover this risk under LIC is best option.
31st August 2018 From India, Bengaluru
Every penny spent on an employee is accounted for CTC. Gratuity is also a part of CTC. As sogemar mentioned, a trust is formed for Gratuity with a Bank and the gratuity share of the employee is deposited.
Once the employee completes 5 years or 4 years and 240 days whichever is earlier in case an employee resigns, gratuity will be paid on last drawn basic @4.81% along with full and final settlement.
If gratuity is a part of CTC and an employee leave with 4 years, company is not liable to pay Gratuity.
Regards,
Shweta Gehlot
31st August 2018 From India, Delhi
#Anonymous
Nothing wrong in making gratuity as part of CTC to my knowledge and need not blame HR. What is CTC, it states what is the total expenditure for an organisation on an organisation which includes all benefits statutory and non statutory that are payable to him. A benefit like LTA will be paid on termination or resignation as part of settlement, while benefits like gratuity are subject to statutory provisions. It is basically to understand by both sides what is an employees cost to organisation.
1st September 2018 From India, Hyderabad
yes you are eligible for gratuity if your grauity a part of ctc
5th September 2018 From India, undefined
Dear All,
If any component in salary is part of CTC then it should be payable to employees at time ending FY or exit of employees
there is no clause to retain this amount even statutory condition is not full fill but mostly company is agree to pay.
Regards
Dhananjoy
8th September 2018 From India
Applicability of Gratuity as per Payment of Gratuity Act and is mandatory to every employer to pay leaving employees, who completed five years of service.
If Gratuity is included in CTC or excluded. doesn't matter.
If employee balance earned leave shall be considered to complete five years of service.
Employer can hold Gratuity payment in certain case.
Employee is dismissed through services due to misconduct as per law
8th September 2018 From India, Satara
Gratuity is payable on completion of 5 continuous years of service.
Inclusion in CTC does not mean that you will get gratuity without completing a minimum period as stipulated by law.
8th September 2018 From India, Bhalta
Gratuity is payable on completion of 5 continuous years of service.
Inclusion in CTC does not mean that you will get gratuity without completing minimum period as stipulated by law.
Calculation : Basic Salary*15/26 * more then 4 Yrs 240 Working Days... He/ she will be applicable for the Gratuity...
9th September 2018 From India, Bangalore
I think the employers are using CTC just to make it attractive to their prospective employees. He need not mention CTC because when he does so as annual package without specifying any other condition such as per Payment of Gratuity Act etc., he binds himself in a specific contract with such an employee who may always want to get his package as per terms of his employment conditions and the employer may not be in a position to wriggle out of this contract even when the employee may not have completed the requisite statutory period as enumerated in the PGA. Who knows, the Controlling Authority under the PGA may view the matter eye to eye with the applicant.
I suggest that the employers should refrain from writing CTC and should clearly specify in the appointment letter to his employee, the amount of salary/wages he would be paid + the statutory benefits like PF, ESI, Bonus, Gratuity etc. Even if the employer does not mention CTC, the employee understands it and gets it in accordance with the applicable law.
Give it a thought.
Best wishes and regards
13th September 2018 From India, Chandigarh
Hi
If it is part of the CTC, Yes its payable, even though you haven't completed 4 years and 240 days
Thanks
SMJ
14th September 2018 From India, Faridabad
Hello everyone.
Indeed, writing the word CTC is unnecessarily giving a handle to the Controlling Authority, Appellate Authority of Higher Courts to construe its meaning against the employer. It really does not bring any benefit to him. May be he may have to face hard time to give justifications at different forums for such an unnecessary word. Hence, better avoid than feel sorry later.
Regards
14th September 2018 From India, Chandigarh
If it is part of the CTC and clearly not mentioned in appointment letter or in terms and conditions of employment, then Yes its payable, even though you haven't completed 4 years and 240 days
Regards,
V K SHARMA
14th September 2018 From India, Delhi
When you see at CTC, the particulars of salary shows in the break-up becomes an employee benefits. Therefore, its a liability by an employer to pay the employee benefits which includes in the CTC.
No employee would like to leave his/her liberties assured the time of hire and entitled avail complete facilities were offered.
Dear Seniors, correct me if I am wrong.
Rgds,
Anand
15th September 2018 From India, Bangalore
All the Answers related to Gratuity Act.
17th September 2018 From India, Kolhapur

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Yes Gratuity will be the part of CTC but payable only on completion of 5 continuous years of service.
Thanks & Regards,
From,
sumit kumar saxena
20th September 2018 From India, Ghaziabad
Gratuity is a kind of sweets from employer side for long terms services advantage,It can only pay after maturity period.
The representation from employer side is ,if you can stay for a long period here then there would be an additional advantage of gratuity,finally gratuity cost bear by the employer only and hence it is an expenses towards employee by employer.If monthly salary does not includes the gratuity cost then there is no liability to pay gratuity before maturity period.
27th September 2018 From India, Delhi
Hi all,
Pl.be clear - Gratuity is
1. A Service benefit due & payable only on completion of 5yrs of contiuous service with the very same employer;
2. It's not payable monthly as a part of salary whether one follow CTC or non-CTC pattern;
3. If an employee leaves the employment before completion of 5 yrs continuous service, he/she has to forfeit the gratuity as it is not encashable like 'unutilised leave at credit';
Of course, in some cases like PSUs, govt/quasi govt. services, grauity could be transferred by remittance/transfer of proceeds from the previous employer to the present employer when mutually agreed to such an arrangement;
4. An employer can either follow the Gratuity Act or their own Gratuity Rules modeled on the Gratuity Act (which offers more benefits than the Act). In such cases the gratuity kitty is known to be much more than what's offered under the Act;
5.Gratuity Act does not offer any clarification of CTC type of service condition.
(I also feel (Govt of India), the Gratuity Act should be amended to address concerns
reg.CTC type of conditions of service.
29th September 2018 From India, Bangalore
All statutory and non-statutory variables like Basic, DA, HRA, Allowances, Bonus, EPF (24%), Gratuity, Superannuation etc are all part of CTC. CTC is 'cost to company' and employees' total cost as a percentage of net profit becomes part of an annual budget exercise for professionally managed companies. CTC contains hidden costs and these variables are used to manipulate the figures at the time of annual increment as higher management are allocated a higher percentage of increase in their salaries. For a 8,000 Crores company, a 5% reduction in overall CTC will save Rs. 400 Crores. So this is a strategic human resource activity where CTC numbers are used for downsizing etc.
7th October 2018 From India, Mumbai
Sogemar Ji
But this explanation of yours does not answer the query. It seems that the term 'CTC' is relevant only for the employer for his budgeting purposes. In no way it inspires any extra motivation in employee's mind because he will get these statutory benefits whether employer write CTC or not in his appointment letter. Rather, another window of trouble may be opened for the employer in case the employee leaves service before completing the eligibility period of gratuity and choose to claim gratuity as being part of CTC. The 'Controlling Authority' may agree to his claim as this is a more beneficial right made available to him in his Appointment Letter and the same is also in tune with section 4(5) of the Payment of Gratuity Act, 1972.
Best wishes and regards
7th October 2018 From India, Chandigarh
CTC is used as one of the components for HR budgeting. It is also a motivational tactic to show big figures of CTC where the candidates get carried away and join and later comprises or leave the Org. Yes, you are right, there are labour court cases claiming gratuity deductions as non-statutory deductions as part of CTC and therefore liable for payment of gratuity. International companies pay gratuity annually in Mumbai. However, statutory gratuity is payable after an employee complete 4 years 240 days of continuous service.
7th October 2018 From India, Mumbai
Dear friends,
It's high time everyone should be clear some of the facts already discussed here by learned members. To summarise them -
1. Indian laws doesn't offer any, any interpretations about CTC.
2. Practicing, imposing or accepting & interpreting CTC is the prerogative of employers & employees & at one's own cost & risk.
3. Even courts have not spelt out any codifications on CTC.
4. Though, generally gratuity is considered as part of CTC there is no hard and fast rule whether to include or excluded and what are all.
5. Even Gratuity Act also doesn't say anything about CTC.
6. Irrespective of whether or not included in CTC, gratuity is payable when an employee leaves an employer subject to ONLY after completion of a qualifying "continuous service" of 5 years ( 4 yrs + 240 days in the 5th year) with the very same employer (except when he/she forfeit gratuity as per law on certain lawful grounds).
7. Even when included as part of CTC, gratuity is NOT payable monthly as it is not part of gross salary or take home salary.
8. There is no legal obligation for an employer to open a bank a/c and invest gratuity fund on monthly basis. However it's the legal responsibility of an employer to create adequate provisions/liability towards gratuity in their Annual Accounts which is compulsory as this is meant to defray gratuity obligations of the employer.
9. In case of non-payment of gratuity to a legally eligible employee, the employee can seek intervention of appropriate officers & legal remedies. In which case the employer is liable to pay over due interest on delay in payment of gratuity at prescribed rates. Therefore there cannot be loss even when payment is delayed.
10.Above all gratuity is NOT contributory like EPF from employees' side as employers have to contribute 100% including over due interest.
Individual queries if any, on certain complications can be addressed.
8th October 2018 From India, Bangalore
Dear All,
Gratuity is part of CTC and if you were exit before complete of 5 years then as per compliance it will payout as "Exgratia"

Regards
Dhananjoy Kumar
8th October 2018 From India, Ahmadabad
If CTC break up simply says Gratuity, then , in my opinion, the employee has a right ti get Gratuity as mentioned in the Offer letter. In addition, jf he or she completes minimum stipulated period under the Payment of Gratuity Act, then he or she is eligible to receive Gratuity under the Act as well.
Alternatively, if the CTC description clearly says Gratuity under Payment of Gratuity Act, then the employee is eligible only under the Payment of Gratuity Act after completing stipulated service.
However, this has no been tested in any court as of now. If CTC description simply says Gratuity, then the employee can only move Civil Court and can not file a pettition under Payment of Gratuity Act.
There are many judgements on wages and salaries but to my knowledge there is no Judgment on the term CTC as it has no place in Labour Law as on date. One needs to move a civil court to get correct verdict on this subject.
However, I always advise my clients to use the terminolgy Gratuity under Payment of Gratuity Act when giving break up of CTC
T Sivasankaran
12th October 2018 From India, Chennai
Answer is not clear yes or no.
In CTC concept, generally there is notional debit of certain amount from CTC. Because the amount agreed as remuneration is not being paid but kept aside to be paid towards gratuity. While in other cases, in older pay structure philosophy which is also known as GPA or Gross per Annum, where the gratuity is Benefit and was being paid over and above the agreed remuneration.
Gratuity is loyalty bonus, and if the amount towards loyalty bonus is from employee’s committed CTC, ethically companies are bound to pay irrespective of the eligibility tenure, yeah it may not be termed as Gratuity but can be said as Ex gratia. On ex gratia there will not be any Income Tax relief.
So it depends on the company’s policy, progressive and ethical companies if makes debits/provision towards Gratuity from employees' CTC, they do pay as ex gratia prior to 5 years’ tenure and as Gratuity upon completion of 5 years.
Shailesh Parikh
9998971065
12th October 2018 From India, Mumbai
Friends,
Could you post/share info of any instances of gratuity when followed under CTC pattern was paid in cash/cheque/cr.to a/c or in any manner by in any co/firm. Obviously employers will have to pay gratuity to those employees when they leave their firm if the employees completed 5 yrs continuous service as per the Gratuity Act and there is no confusion. Whereas what we are deliberating is in case employees leave firms before completing 5 yrs of qualifying service for gratuity and if so how they are paid the component towards gratuity form part in CTC pattern. We have been believing in such instances, these firms do not pay anything as gratuity and thus concerned employees are deprived of their share of CTC. Hypothetically, assume Mr.X, throughout his career, say till his superannuation age of 60, went on changing his employers, in every such change over, before completing 5 yrs and therefore Mr.X never tasted any gratuity in his life time just because i) he didn't complete 5 yrs with any of his employer and ii) all his employers followed only CTC. Does this fit into logic ? What's the solution ?
13th October 2018 From India, Bangalore
Dear All
Appreciate inputs from various learned members on gratuity. However the following may please be clarified.
1.Where is it mentioned that an employee 4 years and 240 days of service will be entitled for gratuity. This is debatable. Is it through high court decision ( chennai, if i remember it) , if so , is a decision of high court applicable only to the particular state or is it applicable to all over india??
2. In general it is 5 years of continuous service for entitlement, where 5 years and beyond 6 months is 6 years, else it will be for 5 years.
3. If the word 240 days is used, ( does it include weekly Off's, holidays, leaves ) or is it on working days or calendar days?? There is no clarity on this . ?
Can somebody please throw light on the above??
Thanks.
15th October 2018 From India, Visakhapatnam
1.Where is it mentioned that an employee 4 years and 240 days of service will be entitled for gratuity. This is debatable. Is it through high court decision ( chennai, if i remember it) , if so , is a decision of high court applicable only to the particular state or is it applicable to all over india??- Applicable only for respective STATE i.e. Tamilnadu
2. In general it is 5 years of continuous service for entitlement, where 5 years and beyond 6 months is 6 years, else it will be for 5 years. - Correct
3. If the word 240 days is used, ( does it include weekly Off's, holidays, leaves ) or is it on working days or calendar days?? There is no clarity on this . ?- All days including Paid Holiday, Weekly Off, All Authorized leave are covered to calculate 240 days / 5 years service
15th October 2018 From India, Pune
Dear friends,
This part of interpretation is being discussed in this forum almost for a decade now. Seekers, please take atleast a few minutes to refresh past postings on the matter being discussed. This will avoid oft-repeated matters raised all over again. Pl.be informed
e judgment of Supreme Court rendered under the provisions of the Industrial Dispute Act in Surendra Kumar Verma vs. Central Govt. Industrial Tribunal,[(1980) (4) S.C.C.433)], it is enough that an employee has a service of 240 days in the preceding 12 months and it is not necessary that he should have completed one whole year’s service. As the definition of continuous service in Industrial Dispute Act and Payment of Gratuity Act are synonymous, the same principal can be adopted under the act also and hence an employee rendering service of 4 year 10months 11days is considered to have completed 5 years continuous service under sec.4(2) and thereby is eligible for gratuity."
The gratuity act says continued services. The continuity in service is clarified by SC a year means 240 working days in a different context but nothing is stopping you to adopt the sum & substance of the concept while applying. Hence , an employee who has completed 4 years 8 months and 18 days continuously without any break is eligible for Gratuity under the Act.
For further reading use this link-
https://www.citehr.com/108564-sc-jud...-download.html
15th October 2018 From India, Bangalore
Dear Mr.Kumar
Thanks for your insight. Has the gratuity act amended to above affect?? Has there been a gazette notification , Appreciate if you any information on this?
I think it is no. Then the interpretation of this for now left to individual employer. Barring few companies, most companies would avoid extra outflow, if the service is below 5 years service.
Also, in some cases the Gratuity is shown under CTC and part of the employee's compensation. But here also certain companies might pay and few others might not pay.
Thanks and warm regards
16th October 2018 From India, Visakhapatnam
I mean pay for service less than 5 years, though shown under CTC.
16th October 2018 From India, Visakhapatnam
I'm not sure for any amendment to GA to give effect to 240 days concept. However the attached SC judgment may throw some light on this issue, I hope especially for those who need some supporting doc.to consider 240 days/year of service.
16th October 2018 From India, Bangalore

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File Type: docx 240 days for Gratuity-SC judgment.docx (25.0 KB, 43 views)

Dear friends,
Re: Gratuity in respect of employees under CTC - for those who either leave before 5 yrs of qualifying service or otherwise.
It's high time that citeHR forum & members should mobilise public & political support for reigning(rein) in some legislation addressed to 1) for codifying CTC pattern type emoluments and 2) rationalisation of terminal benefits to those switching jobs before completing qualifying service covered under CTC. Now, At a time the frequency of switching of jobs especially in IT/ITES, Bio-Tech sector is witnessed very high and therefore it's timely need.
This has major impact more on gratuity contribution than other benefits like accumulated leave left behind unavailed, health insurance, unutilised LTC pertaining to the past service etc. Some sort of transfer arrangement like EPF should be in place to solve the loss in this regard.
16th October 2018 From India, Bangalore
This is specific to the query on whether Madras High Court Judgement is valid for other States
1. SC verdict covers all States
2. HC Judgements will cover the specific State
3. However, if there are no other Judgement by any other State High Court, the NJudgement may be construed as binding on Lower Courts But if any appeal is pending, then this may not be binding in other States
Sivasankaran
31st October 2018 From India, Chennai
I don't see any reason for denying gratuity despite SC judgment supporting specifically 240 days analogy. If they are not willing to adopt Madras HC judgment how they are justified ignoring SC judgment which is binding every employer all over India. Claimants should take it up aggressively to secure their right to gratuity.
31st October 2018 From India, Bangalore
Gratuity is Part of CTC but payable only after the completion of 5 years of service and eligiblity should be 4 years 240 days. simple answer
Thanks & Regards,
From,
Sumit Kumar Saxena
5th November 2018 From India, Ghaziabad
Dear All

++++++++++++++ Thanks for your inputs. Wish a happy and prosperous festival of lights, DIWALI +++++++++++++
5th November 2018 From India, New Delhi
Dear friends,
TV reports indicates that the GoI is seriously considering amending the Payment of Gratuity Act to enable entitlement to gratuity to those completed 3 yrs itself instead of present 5 yrs continuous service. If this becomes real lakhs of employees will receive the benefit, may be at the cost of employers, who shouldn't mind (keep guessing what's going to be like- prospective or retrospective, keep fingers crossed) . Reports suggest that GoI solicited opinions of stake holders (here not the employees but from employers). May be the election year will boast of this new beginning, a wind fall indeed, let us hope. All the best to all frequenters.
Yesterday From India, Bangalore
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