Understanding Gratuity: Who Pays It and What Happens If You Leave Early?

I want to know whether gratuity amount is paid by the employer or employee. Further, I want to know if the gratuity amount is deducted from the employee's CTC. Will I get this amount back if I decide to leave the organization before completing 5 years of service? As far as I know, one becomes eligible for gratuity only after completing 5 years of service, isn't it?

Regards,
Rakhee

Dear Rakhee,

Gratuity is paid by the Employer to the Employee. This is a part of the CTC. If you refer to the gratuity act, then you will come to know the eligibility for it. If you leave before completing 5 years of continuous service, you will not become eligible to receive it.

If you require further information, please let me know. You can email me at limaye.kedar@rediffmail.com or kedarpunehr@gmail.com.

Kedar

Dear Mr. Malik,

Gratuity is paid by the employer to the employee after completing five years of service or in the case of death before completing five years of service. It can be a part of CTC, but you will receive it only if you complete five years of service.

Thank you,

J.S. Malik

It has actually been deducted from the employee's CTC, so it is indirectly paid by the employee.

If a company states that your gratuity will be deducted from the date of joining, that means your amount will be deducted every month, but you will receive it after 5 years. If you leave the company before that, it's gone.

In this issue, can you please suggest how we can negotiate with the company not to deduct gratuity? :-)

Regards.

Hello Rakhi,

You need to understand the CTC funda first. Being part of CTC is different from getting deducted from salary. Refer to the post explaining the CTC here on citehr. If you think that gratuity is being taken from the employee's pocket, then you will also come up with an issue that an employer is taking away 24% of the base salary as PF amount, which is not actually the case.

Regards,

It is written that the X amount will be deducted from your salary on a monthly basis as a part of Gratuity from the date of joining. I have also added the clause - "Please note that the Company PF and Gratuity have been deducted from the Special Allowance Bracket as the salary specified is Cost to Company." Can you please explain now?

Regards,

Hi,

I would appreciate it if you could provide the entire salary structure here so that everyone can better understand it. Please include all components of your compensation package.

Alternatively, you can email the information to me in a Word or Excel format. This will allow me to add comments and send it back to you.

Regards,