Thread Started by #hemlata arya

Please advise employer deduct gratuity from employee salary every month - it is under act?
2nd January 2019 From India, New Delhi
Employer is not authorised to deduct any amount from employee pay on account of gratuity.Employer has to cater for likely gratuity payments to employees as per their entitlement as and when due.
He can take LIC policy or from some other insurance company to pay due amounts to entitled employees.
But deducting any amount from employee on a/c of gratuity is illegal
2nd January 2019 From India, Pune
Dear colleague,
It is outright illegal to make deduction from employees' salary when the responsibility is squarely cast on employer to pay it when due and eligible from his funds or through linkage with LIC.
Make a representation to the top person and bring to his notice this grave violation of legal obligation and refrain from this act and also to refund the amount already illegally deducted.
Vinayak Nagarkar
HR- Consultant
2nd January 2019 From India, Mumbai
Dear Hmlata
Are you in CTC regime? If yes. Please check it must be notional credit and debit.
Shailesh Parikh
99 98 97 10 65
3rd January 2019 From India, Mumbai
Dear Contributors,
To clarify, Employer can not deduct gratuity contribution from the employee's earnings; however showing the gratuity component as a separate component (benefits) to compute the Total Cost to the Company (TCTC) is a legit practice and is adopted by most of the companies. There is no logic to it, it is just like adding froth to the beer; inflating the Total compensation by adding benefits like Gratuity, insurance etc to make it look more lucrative.
Rahul Chhabra
3rd January 2019 From India, Delhi
Dear Colleagues,
Gratuity does form part of CTC which is understandable. If the legal responsibility is put on the employer, where is the need for either deduction or notionally showing it as debit and credit. It is forthright ridiculous.
Vinayak Nagarkar
HR- Consultant
4th January 2019 From India, Mumbai
Under Payment of Gratuity Act 1972, payment of Gratuity is responsibility of employer and no contribution from employee.
5th January 2019 From India, Madras
NO-Employer can't deduct from the employee. Insurance can be taken to handover the burden is the wise way to manage .I generally advice to the employer to do so.
Brij Pathak
Manger HR
6th January 2019 From India, Vadodara
Gratuity is given/paid by the employer to his/her employee for the services rendered by him during the period of employment. It is usually paid at the time of retirement but it can be paid before provided certain conditions are met.
A person is eligible to receive gratuity only if he has completed minimum five years of service with an Company/Organisation. However, it can be paid before the completion of five years at the death of an employee or if he has become disabled due to accident or disease.
Business owners will do wrong practice because of their profit.
Mohan Nair
7th January 2019 From India, Mumbai
Kindly check, is it CTC or Gross Salary? Gratuity is the part of CTC.
7th January 2019 From India, Delhi
It is improper to show Gratuity amount as a part of CTC with the following reasons:
1. There is no monthly outgo payment towards Gratuity against any employee.
2. Gratuity is payable after 5 years continuous service on last drawn salary than how come employer project CTC amount on running salary?
3. If an employer shows Gratuity contribution as part of salary (CTC) then it should be paid to the employee on separation before completion of 5 years service as the so called contribution shown as CTC against gratuity is not payable by employer to the gratuity fund.
4. Companies are availing tax benefit on accrued gratuity amount.
5. As regards to PF, ESI contributions, it is monthly outgo from eligible employees from day one and the monies goes to Govt. Treasury every month. Whereas the gratuity amount they need not pay to the Trust and or LIC every month. Thus showing gratuity amount as CTC in employees offer and or Appraisal in not justified.
7th January 2019 From India, Thane
Dear Colleagues,
Since gratuity is a cost to the company and legal obligation, it is perfectly alright to show it as a part of CTC just as PF and ESI.
There may not be monthly outgo, but funding provisions have to be made in books of accounts for its future liability.
But what is condemnable is deduction by the Employer towards gratuity from employees' salary every month. It is illegal and if it is not stopped forthwith, he should be dragged before Authorities for serious breach of law and punishable offense.
Vinayak Nagarkar
HR- Consultant
7th January 2019 From India, Mumbai
Dear Hemlata,
There are lot of opinion on your query. Let us understand the mathematics behind TCTC/CTC.
Let us consider the TCTC/CTC per annum is INR 3,60,000/- i.e per month INR 30,000/-. Let us also consider the components includes at CTC are - (Basic, HRA, Allowences = Monthly gross) + Employer's portion of PF & ESI(if applicable) + Statutory Bonus (if applicable) + Gratuity + Any other payment proposed to pay the employee.
Therefore, to arrive at monthly gross it is essential to deduct other components i.e from 30,000/- it will be required to deduct Employer's portion of PF & ESI, Statutory Bonus, Gratuity & Any other payment.
Now , we will arrive Basic , HRA & Allowances.
When we offer employment , now a days most of the employers are showing TCTC/CTC . There are Organizations who process pay roll from CTC which is technically wrong. Offering CTC is one part, but when we will process pay roll it should be from monthly gross otherwise confusion will continue.
The offer of the Organization may be (Basic + HRA + Allowances = Monthly gross) * 12 = Yearly gross + Yearly Employer's contribution to PF & ESI + Yearly Statutory Bonus + Yearly Gratuity Liability + Yearly any other liability. Pay roll will be on the basis of monthly gross only.
Trust this will satisfy your query. For further clarification you may cntact me.
Thanks & Regds.,
S K Bandyopadhyay( Howrah, WB)
+91 98310 81531

8th January 2019 From India, New Delhi
Yes, it is legal. Gratuity is a part of CTC ( Cost to company). A few companies have Gratuity fund with banks where they deposit gratuity for all employees. Gratuity can be deducted from an employees CTC but not gross salary. Most of the companies now a days prefer keeping everything in CTC so they know their total cost involved on an employee.
Hope thsi helps.
Shweta Gehlot
8th January 2019 From India, Delhi
In simplified terms Gratuity should pay (bear cost) by employer/buisiness owner/company/organisation. It should be cost to company (employer) and should not be cost to employee.
Mohan Nair.
8th January 2019 From India, Mumbai
Dear Hemlata,
Employer can show this amount in employee's CTC because this is a part of company expenses for Employee
CP Singh
9th January 2019 From India, Noida
Dear colleagues,
Those forum members who have opined about gratuity being part of CTC, are missing the core point of the query. The issue is the employer has deducted from the salary of the employees an amount towards the gratuity and query is posed whether this is alright as per the Gratuity Act. Myself and several others have categorically stated that this is illegal.
Vinayak Nagarkar
HR- Consultant
9th January 2019 From India, Mumbai
Dear Mr. Vinayak,
Request you to read my earlier posting properly. Gratuity is a part of CTC/TCTC or not is not the problem. Because CTC/TCTC has no legal stand.
It is the problem of processing pay roll. If any organization starts processing pay roll and show it to pay slip from monthly CTC/TCTC level and then deduct the items included in CTC along with Gratuity ,then it will be technical problem to convince any statutory authority. CTC is internal matter of the Organization. If the same Organization process payroll from monthly gross after internally adjusting all deductions from CTC including Gratuity, then question of deducting Gratuity from salary will not arise.
Trust this will satisfy your query.
Thanks & Regds.,
S K Bandyopadhyay
+91 98310 81531

10th January 2019 From India, New Delhi
Dear Mr Bandopadhyay,
Let me correct you that I have no query and I have given my views on the original poster's query. Some colleagues have digressed and opined on gratuity being part of CTC or not which is not what the querist wants.
Vinayak Nagarkar
HR- Consultant
10th January 2019 From India, Mumbai
Dear Mr.Vinayak Nagarkar,
I am extremely sorry to mention the sentence "Trust this will satisfy your query"as it was not your query.
Hope you will take it sportingly.
Best Regards,
S K Bandyopadhyay ( Howrah, WB)
+91 98310 81531

10th January 2019 From India, New Delhi
No Employer is not authorised to deduct any amount from employee pay on account of gratuity
10th January 2019 From India, Ghaziabad
No such provision in Act. Employers' liability should not be deducted from Employees' salary/wages. Furthermore Employers' liabilities such as ESI, PF, Gratuity etc. are not to be treated as wages. You may refer payment of wage act.
11th January 2019 From India, Madras
No Employer cant deduct Gratuity from wages, as its total employer responsibility to pay gratuity at the time of separation after 4 years and 240 days or death at any time in the service period.
According to some friends its correct to put in CTC, they are misguiding to other members because for the first year if employee basic is 12000 then his gratuity contribution become 573.00
Next year his basic revised by 13500 than Gratuity become 650.00
Like this, it will increase till the fourth years and maybe 820 Now employee relives after five year and eight months when his basic is 20000 according to it his gratuity calculation should be on 962 on monthly basis for five years means 60+8=68 month
it would be 68*962=65416.00
Not according to the fixed CTC calculation.
So please its HR duty to guide their employer incorrect direction
14th January 2019 From India, Delhi
So don't put gratuity in CTC it can be calculate after the service separation only.
14th January 2019 From India, Delhi
The calculation as shown above is incorrect. If any employee worked for 5 years 8 months i.e 68 months and his last drawn basic is 20,000/- per month, then his gratuity amount will be (20000/26)*15*6 = 69,231/- .

Secondly the consideration that has been made that the money deducted from CTC every month will not be invested properly is not right. Either the money will be invested to any insurance or to be managed by the Gratuity trustee formed by the company.

Whether Gratuity should be part of CTC or not is the Organization's own policy as there is no legal bindings. If it is not part of CTC , question does not arise to deduct gratuity from salary - it is illegal. But if it is part of CTC , it has to be managed professionally otherwise it will also create problem.

S K Bandyopadhyay ( Howrah, WB)
+91 98310 81531

14th January 2019 From India, New Delhi
Dear Colleagues,

As I observe, enough has been said on the original query mostly repeating the same points or digressing without adding much value.

It is time we pull the plug on it if no fresh valuable views are forthcoming.


Vinayak Nagarkar
HR- Consultant
14th January 2019 From India, Mumbai
Pls Refer My OFFER,This legal or illegal Pls find the attached
14th January 2019 From India, Coimbatore

Attached Images
Membership is required for download. Create An Account First
File Type: png 1.png (139.9 KB, 24 views)

Employer is not authorised to deduct any amount from employee pay on account of gratuity. Employer has no right to cut it in his/her salary.
15th January 2019 From India, Bhilai
Any deduction which is no at par with the Payment of wages Act is illegal. Aside, the employer has no legal right to deduct the gratuity from his employee. In case there is any agreement to this respect it will be voidable at the instance of the employee and by Court's order.
If your employer is deducting gratuity amount every month, please get those receipts or that deduction should be reflected in your pay-slip, else it will be difficult to prove in the Court of law.
16th January 2019 From India, Kolkata
In a couple of months, I'm sure no one will be online, as all my friends will be watching canadian grand prix 2019 live stream . Exciting!
16th January 2019 From India, Badlapur
From the PAY SLIP you have provided, it is not seen that they have deducted any statutory deduction from your Monthly gross salary which is your real salary to appear on the PAY SLIP. To arrive at the net pay they have deducted only PF contribution (employee's share) from the monthly salary (Monthly Salary Rs. 28519.00 Less PF Rs. 2053.00 Net Pay Rs. 26466.00).

They have provided other benefits on yearly basis like PF, Grtuity. Leave. Bonus and Medical Insurance to arrive at the Cost to Company (CTC).

If during the negotiations if you accepted 4,00,000 as CTC, then the break up seems to be correct except any mathematical mistake.

If you understood Rs. 4,00,000 as your yearly salary (=Monthly salary Rs. 33,333/-) and if the employers offered you Rs. 4,00,000 as yearly gross CTC. then there is mis understanding

Today From India, Mumbai
Reply (Add What You Know) Start New Discussion

Cite.Co - is a repository of information and resources for business and professional growth. Register Here
Prime Sponsor: TALENTEDGE - Certification Courses for career growth from top institutes like IIM / XLRI direct to device (online digital learning)

About Us Advertise Contact Us
Privacy Policy Disclaimer Terms Of Service

All rights reserved @ 2017 Cite.Co™