Umakanthan53
Labour Law & Hr Consultant
Sridharammu
Senior Manager

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My company deducting the Gratuity amount from our salaries. Gratuity is a part of CTC. one of my friend served in 2 years and left the organisation. is he eligible for gratuity? why because company already deduct the gratuity amount from our salary every month. Pls.let us know the clarity about the issue.
Dear Sridhar,
Yours is one among the most oft-repeated questions relating to gratuity in the CiteHR. You could have got clarity by going through the previous threads relating to the same issue.
Simply put, gratuity is a terminal benefit payable by the employer on the termination of employment of the employee after rendering the minimum qualifying service under him. It can be shown as a part of CTC for it is a cost to the employer periodically set apart for later payment. But it cannot be a component of wages to be deducted from the employee at all. The employee is neither legally nor contractually bound to make any contribution towards gratuity. If it is deducted by the employer from the wages/salary of the employee just because it is projected in the CTC, it is certainly an illegal deduction against which the employer can be proceeded against under the Payment of Wages Act,1936 wherever it is applicable or under the Civil Law for breach of the contract of employment.

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