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Dinesh Divekar

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Dinesh Divekar

From India, Bangalore
Dinesh Divekar
Business Mentor, Consultant And Trainer
Seasoned Ir Professional
Ceo-usd Hr Solutions


Order on HDFC Bank Gratuity is basically moves towards definition of wages as per new labor codes which is same in all 4 codes. Safe side may be only Basic, DA and HRA in monthly gross and no other component.

S K Bandyopadhyay ( WB, Howrah)
CEO-USD HR Solutions
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From India, New Delhi

The issue is not the definition of wages under any code but the treatment. I am also expecting my case to be decided soon from the same authority. I have written in my blog some four years back about how to treat the wages for gratuity. The same is available in the following link. Please follow the link.

Madhu T K: Payment of Gratuity and Gratuity Qualifying Salary

The Personnel Managers have been quoting the Supreme Court verdict in Strawboard Manufacturing Vs Workmen in support of their calculation that it is basic and DA alone to be taken for gratuity calculation . In this case Justice V R Krishna Iyyer has said gratuity is payable on Basic and Da and nothing else. But this is a case of interpretation of a gratuity scheme of the Industrial Tribunal and not the Payment of Gratuity Act. The case pertained to a period prior to passing of Payment of Gratuity Act in 1972. The case was started in 1958 but the verdict came from the Supreme Court in 1978, ie, after the enactment of the Act. But there was references only of the Tribunal's gratuity scheme. The contention was whether DA will qualify for gratuity or not. The question of other allowances did not come then.

My view is that if you have a salary agreed it should be remuneration payable and whatever bifurcation that the employer is making is irrelevant. It is interesting that for deducting one day leave without pay, the employer will take the entire salary but for other matters like calculation of gratuity they will take only Basic pay. When there is nowhere stated in the Act that only basic pay will decide the amount of gratuity, the calculation of gratuity based on basic pay is totally wrong.

From India, Kannur
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