I agree on the Rs 10000 bit. However there are many aspects that are considered in the CTC.
First of all most MNC's (and Im sure every other Industry too) have 2 CTC figures.
a) One that is declared to the employee and includes his salary, perks and other reimbursable components
b) an internal CTC that considers many other items that are not declared but are incured as a result of hiring the employee. These may range from Uniform Expenses, safety equipment (shoes, eye protection, masks and consumables), water per person per month, electricity, assets like desktops software licenses, file storege space, furniture, power consumption, food allowances, tea, coffee and buiscuits. THis CTC is exculsive to HR and Finance and not disclosed. this goes towwards budgeting for operational costs.
Now since gratuity is not reimbursable to the employee on an annual basis and in the employees perspective is only a "terminal" benifit, mention of this as a one liner in the Appointment letter would be sufficient therey indicating the 5 year period. Inclusion of the same in annual declared CTC and specifically before the completion of 5 years only raises confusion. This expenses should be left out of the declared CTC. This would avoid confusion and be ethically right to the employee.
Items in CTC are reimbursable to the employee annually (annual financial statement closure). If a component of Gratuity is added in the CTC of the employee who has not completed 5 years it means that
a) this amount is not being paid to him and is treated as a deduction.
b) If the employee does not complete 5 years the amount should be paid back to him as ex-gratia amount not withstanding the Gratuity act as the Gratuity act is not applicable to him. This is ethical because the amount actually is due to the employee by way of annual deductions from his CTC.
However if Gratuity is not mentioned in the employees CTC, he has no right in demanding that amount as terminal beinfit until the completion of 5 continious year service.
These are my opinions and I hope someone who is profficient in labor law will share my views.
First of all most MNC's (and Im sure every other Industry too) have 2 CTC figures.
a) One that is declared to the employee and includes his salary, perks and other reimbursable components
b) an internal CTC that considers many other items that are not declared but are incured as a result of hiring the employee. These may range from Uniform Expenses, safety equipment (shoes, eye protection, masks and consumables), water per person per month, electricity, assets like desktops software licenses, file storege space, furniture, power consumption, food allowances, tea, coffee and buiscuits. THis CTC is exculsive to HR and Finance and not disclosed. this goes towwards budgeting for operational costs.
Now since gratuity is not reimbursable to the employee on an annual basis and in the employees perspective is only a "terminal" benifit, mention of this as a one liner in the Appointment letter would be sufficient therey indicating the 5 year period. Inclusion of the same in annual declared CTC and specifically before the completion of 5 years only raises confusion. This expenses should be left out of the declared CTC. This would avoid confusion and be ethically right to the employee.
Items in CTC are reimbursable to the employee annually (annual financial statement closure). If a component of Gratuity is added in the CTC of the employee who has not completed 5 years it means that
a) this amount is not being paid to him and is treated as a deduction.
b) If the employee does not complete 5 years the amount should be paid back to him as ex-gratia amount not withstanding the Gratuity act as the Gratuity act is not applicable to him. This is ethical because the amount actually is due to the employee by way of annual deductions from his CTC.
However if Gratuity is not mentioned in the employees CTC, he has no right in demanding that amount as terminal beinfit until the completion of 5 continious year service.
These are my opinions and I hope someone who is profficient in labor law will share my views.