Am I Eligible for Gratuity After 3.5 Years? Seeking Advice on Company Policy and Regulations

Sir,

I joined a software company on 6th June 2005. My appointment letter states that I am eligible for gratuity if I serve the company for a minimum of 3 years. The offer letter mentioned a note that "This may vary depending on government rules and regulations in effect."

Now, I have completed 3 years and 6 months and have just resigned from the company. Am I eligible for the gratuity? When I contacted HR, they mentioned that I need to obtain information from the gratuity board regarding this.

Can someone assist me with this issue?

Thanks,
Prasad

Dear Prasad,

As per the Payment of Gratuity Act, you are not eligible for gratuity. However, your appointment letter indicates that you are eligible after 3 years. This discrepancy lies between you and the company. It may have been a mistake made by the HR personnel at that time. If the appointment letter states, "you will be eligible for gratuity as per provisions of the Payment of Gratuity Act," then the 3-year requirement could be seen as a clerical error. The qualifier, "subject to government rules and regulations in this regard," supports this interpretation. Your decision to resign from the company after 3 years should not be viewed as an attempt to gain gratuity. On the contrary, if the Gratuity Act is not mentioned, you can request the management to provide it, and it is their responsibility to seek clarification from any relevant government authority.

Regards,
Madhu.T.K

Sir,

Today, I received an interesting email from my HR department stating that "Gratuity will be processed, and it will take 2 to 3 months." In my appointment letter, there is no mention of being eligible for gratuity as per the provisions of the Payment of Gratuity Act. I have just rechecked that.

In my appointment letter, there is a column for the gratuity amount, indicating that it is part of my Cost to Company (CTC).

My intention here is not to claim the gratuity amount, but to understand how it can be part of my CTC, which I should receive. Is there a government gratuity board where all companies deposit the gratuity amount on a monthly basis, or is it the company's responsibility to directly provide the same amount after an employee's resignation, provided the individual is eligible for gratuity from the company?

Many thanks for the reply, Madhu.

Thanks & Regards, Prasad

There is no Gratuity Board like Provident Fund to which each employer should contribute. It is a payment made whenever an employee leaves. Since the amount of gratuity will vary according to length of service and amount of salary at the time of leaving, it is not practical to form a fund also.

The new style of pay slips shows gratuity as part of CTC and deducts on a monthly basis an amount from the CTC. If this is the case, the employer will be forced to refund it because CTC shall be interpreted as gross salary payable, and any amount deducted shall be paid back to the employee in the form of cash itself or in the form of facilities provided. Any deduction other than those refundable (like Provident Fund) and for facilities provided (house rent, medical facilities, etc.) shall be treated as an unauthorized deduction.

Therefore, as communicated by the HR, you may wait for 2 months. Please get back to us then.

Regards,

Madhu.T.K