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Hi, I am working as an HR in an IT company. we deduct gratuity from employee CTC. Should we mention Gratuity in the appointment letter or not. If I mention does it have to have any clause with a fine print for the minimum term of service?
From India, Gurgaon
Please remain friendly and kind (focus on adding value/resources rather than speculations or judgement)
From India, Gurgaon
Hi Sheetal,
You should mention 'gratuity' entitlement in the appointment letter whether you follow CTC pattern or conventional pattern.
W.r.t. minimum service to be eligible for gratuity, it goes with your policy, whether your firm follow the Payment of Gratuity Act or similar one offered thru' other agencies like LIC etc. Under the PGAct, 5 yrs of 'continuous service' (4 yrs+240 days in the 5th yr.) is the criteria. However, if the service condition applicable is 'Fixed Term Employment' for a duration of <5 yrs service then gratuity is payable even if the qualifying service is <5 yrs.

W.r.t. 'deduction' towards gratuity, unless you really pay CTC there is no question of deduction arises. CTC, as I understand comprised of two parts, 1 is sum consists of basic, DA, HRA, other allowances, (bonus) which form part of monthly payable and 2nd part consists of components not payable monthly to employees such as EPF contribution, leave salary, gratuity etc which are payable not monthly but as and when due.

From India, Bangalore
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