Gratuity is the amount the employer pays gratuously for the services rendered by the employee. It was then made mandatory obligation of the employers and the length of service defined as 5 years. It should be taken as 'something in addition to whatever paid as salary' when the employee leaves the employer. But now a days it is taken as a material for attracting candidates. By showing the gratuity amount as part of remuneration the amount will go up, but when the employee opens the pay packet he will come to know that so many amounts have been deducted. This is one of such deductions.
If an employer deducts an amount from the salary of the employee it should be presumed that the same would go to a fund refundable with interest in future. As such if gratuity is deducted from the salary every month, it should be construed as refundable with interest irrespective of length of service. It shall be interpreted as an amount paid by the employee to the employer (for the time being). Moreover, any deduction made by the employer other than those permitted u/s 7 of the Payment of Wages Act, 1936 shall be unauthorised deduction. That should be refunded.
Gratuity is payable after 5 years of service and the amount payable is depends upon the salary of the employee at the time of his leaving.
Is it possible for the employer to know whether a particular employee will remain with him for 5 continuous years or how long a particular employee will remain with him? Is it possible for employer to predict one's salary at the time of his leaving the job when the time comes not before 5 years?. No, Not at all.
There is no logic in treating gratuity as part of remuneration and if treated as part of salary and deducted on a monthly basis the employer shoould return it when the employee leaves irrespective and without reference to length of service.
Please go through the following likns also:
https://www.citehr.com/129726-amendment-bonus-act.html
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Regards,
Madhu.T.K