Gratuity is a part of CTC and employee benifit for termination before completing 5 years

I have joined a MNC 2017 , they have clubbed the gratuity into my CTC part. and had indicated growth benefit for joining the company
At end of 4 years of service citing Pandemic and Degrowth in business, OH reduction , gave me a marching order ,in May 2021, And Claims Gratuity is after 5 years and not permissible in this case
Is There any law which can support me to claim back gratuity indicated in My Appointment order and CTC?

Deepak

From India, Bengaluru
Dear Deepak,

The Payment of Gratuity Act,1972 is in itself a complete Code on the subject matter of statutory gratuity contemplated in it. Therefore, when an establishment to which the PGA,1972 applies shows its annual financial liability to gratuity in the CTC as one of its annual costs incurred towards the employee, it would automatically imply that the payment of gratuity would arise subject to the fulfilment of the conditions of eligibility and entitlement associated therewith only. Besides, in my opinion, CTC appended to the offer of employment is just a statement showing the annual cost of employment to be incurred by the employer and as such it cannot be construed as a part and parcel of the contract of employment.

But, there can be yet another perception treating the CTC appended to the offer of employment as part of the offer and the mention of any benefit of employment therein without any rider clause has to be complied with when the unilateral termination of the contract of employment takes place at the instance of either of the parties. Such a contention would revolve around sec.4(5) of the PGA,1972 under the principle of entitlement to better terms of gratuity under an award or contract. But no one can be sure about the outcome of such a contention in judicial scrutiny.

From India, Salem
No. You are not eligible for Gratuity since no have not completed 5 years of services. CTC is simply as working which mentions about the usual cost to the company.
From India, Chennai
KK!HR
1147

In this forum there are numerous queries received regarding the implications of CTC, how it affects the actual benefits, etc. CTC denotes the Cost To the Company, so besides salary and direct financial benefits to the employee like employer's contribution to PF, ESI, annuity paid for gratuity, incentive, bonus, etc., it also includes the cost incurred by the company for the employee benefits like canteen, provision of uniform, shoes, PPE Items, SODEX like coupons, township expenses, clubs, medical expenses, usually known as Overhead expenses. All these expenses are added together and the sum is divided by the number of employees to arrive at a figure of expenses per employee and all the aforesaid direct expenses sums together form the per head expenses (CTC). Such figures are prominently used in recruitment advertisements. There is a popular saying, the elephant has two sets of teeth, the tusks are for displaying might and prowess, but the useful one for biting and chewing food items lies inside the mouth without any display value. Similarly, CTC is a misleading figure and is only an indicative value of what it costs to the employer to have an employee in a particular post and position, what the employee gets directly is only a fraction of it, in many manufacturing organisations of yore with a lot of voluntary welfare facilities like Township, Hospital, educational institutions, religious worship places, clubs and associations the in-hand receipt may not be even 50% of the notionally derived CTC or per head expenses.
From India, Mumbai
Dear Colleague,

To a question whether the gratuity should form part of the CTC , the answer is yes. Because the liability to pay starts from day one of joining and payable on death for which no eligible service required.

However, there is another condition of eligibility of minimum 5 years' service stipulated which becomes unjust for those who put in less than 5 years' and are deprived of it just like the poster despite the cost of it included in CTC.

Besides , those who are employed on Fixed Term Contract basis are made eligible for gratuity after one or more years of their service.

This is a clear cut discrimination between the regular and FTC employees . The law needs to be amended to correct the discriminatory treatment and provide for gratuity payment after minimum of one year's service for all types of employees and after ceasing employment either by resignation or termination by employer.

Regards,
Vinayak Nagarkar
HR and Employee Relations Consultant

From India, Mumbai
Dear Deepak,

The concept of CTC is to know the financial implication of an employee on employer. In CTC the employer not only shows the Gratuity also consider the part of employer contribution towards EPF. One is eligible for Gratuity after completion of 5 years of service if not mentioned in CTC.

You are not eligible for gratuity for putting 4 years of service. You better fight for the termination if you can.

From India, Mumbai

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