Understanding Gratuity Codes in ERP: How Do They Differ from Employee Codes?

Hi,

This is Srinivas from Hyderabad. I am working as an ERP Coordinator at Avon Tubes. Currently, my company is in the process of implementing ERP (Exensys 4.1) software, which includes an HR module. One of the topics within this module is Gratuity.

On the gratuity application page in the ERP system, there is an option to input the Gratuity code. I have a few queries regarding this:

1) How should the Gratuity Code number be provided in a professional manner?
2) Is the gratuity code number the same as the employee code number, or are they different?
3) What does the Gratuity Act state regarding the Gratuity Code Number?
4) What rules are companies currently following when assigning Gratuity codes?

I look forward to your response via email.

Thank you,
Srinivas Pochamaneni

Under the Payment of Gratuity Act, there is no system of assigning code numbers to the employees. The payment of gratuity accrues when an employee leaves after 5 years of service. The amount of gratuity is calculated based on the salary of the respective employee at the time of their leaving service. Therefore, it is not practical to decide in advance the amount of gratuity and the time of payment.

If you have an employee number allotted in chronological order (based on the date of joining), then the same shall be used for gratuity as well. If so, in particular, by seeing the employee number itself, we can have an idea about their probable date of joining. Regards, Madhu.T.K

Hi,

An employee, upon joining a company, will receive an Employee Code. Their eligibility for Gratuity is only upon completion of 5 years. Not every employee who joins the company may complete 5 years, hence coding is not required (optional).

It seems you are in the initial stages of your career in HR. It would be better to follow the guidelines specified by ERP Consultants, who have a good understanding of the subject.

Vidya.