MNC companies deducting gratuity on a monthly basis not a legal practice or at par with Payment of Gratuity Act, 1972

Hi Friends,
Actually their is no law regarding to show the gratuity in CTC. But Many co. show that in CTC because if employees stay with the company for more than five yrs then Company will liable to pay the gratuity.
As per my opinion it is right.
Govind

Dear Anu,
One thing keep in mind that gratuity is a statutory right of employee whoever completed 5 years in the same organisation.
It is employer liability to provide this cost to employee without including CTC.
You can't say gratuity is a part of CTC.
Just like as amendement of factory licence,you have to pay certain fee to the Govt ,the CTC also a legal requirements of each organisation.
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Dear All,
Earlier also there was a lot of discussions and postings on gratuity as a part of CTC or not. In this regard I too had posted views that CTC should not be a part of CTC and HR professionals of respective companies shold guide the management to not to include gratuity as a part of CTC. The point is very clear:
CTC means cost to company and whatever the cost incurred towards respective employee is to be include but it should be payable to the employee. If any employee leaves the company before five years then it is not payable and should not be part of CTC.
:wink:
Regards,
M Srinivas
Asst Manager - HR
Hyderabad Waste Management Project
Ramky Group of Companies
Hyderabad
9866005600
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Dear Anu,
Gratuity is not an assured payment (before 5 years), also it is a provision made by company in Books.It is statutory contribution.
Company may choose to add any benefit under CTC. But, as HR professionals it is our duty to explain to the candidate / emmployee.
These are my two cents.
Regards,
Sachin Khadilkar

Hi Anu,
I have gone through the whole discussions and found interesting. You are very right that gratuity is not a part of CTC but now a days MNCs are making part of CTC and deducting their contribution on monthly basis. In some companies, they are making payment in the F&F if an employee is leaving less than a 5 years. Top of that companies are also giving them tax rebate also.
I would tell you one fact that employee gets more amount on maturity (after 5 years) than compare to their monthly contribution. If you add monthly amount then you will find the difference. Because company has to pay as per gratuity formula.
Thanks,
John

Hi Anu,
One more point that by doing this company has very litle liability because they are already deducting contribution from employee and making adjustments in the books and paying basically it's a single payment not a double.
Thanks,
John

My understanding, if Gratuity is taken into consideration when calculating the CTC of an employee.
At the time of resignation:
Prior to 5 years : we paid back all amount deducted from the CTC of employee as Gratuity ( considering the same as taxable ) with final settlement of the account,
After 5 years : if employee resigns after 5 years, calculate the gratuity as provided by the formula and pay.

hey Anu don't deviate in a number of advices it my make you confuse, I hv read Employee Gratuity Act of India and it is paid to employees for their loyalty to company if the person have worked 5 years or more than that, 2 years back maximum amount of Gratuity was not more than 3 lakhs...whether calculation goes more that that.......so follow the advice of Mr. Malik only he is guiding you right...

Hi All,
Greetings for the day,
Iam new to this cite.I have one query related to HR Shared Services.What is HR Shared services.:-x Please give your valuable suggesstions and solve my query.
Thanks & Regards
M.Uma

So folks! I don't know about Anu, but I have become more confused :?:

Fact:
CTC is cost to company. Each company has its own way of arriving at a CTC. Some companies add benefits, incentives, extra allowances, even value of transportation as a part of TCTC ( Total Cost To Company)
This is done to enhance the look of CTC to attract employees.

"CTC is different from gross salary. Salary is what you get in hand..... and CTC is a bargaining tool for both employee and the employer - Is it not correct?"

Doubt1:
Gratuity is something that needs to paid by the company to the employee eventually. After 5 years. Agreed.
How is it unethical then to put it in cost to company? After all it is cost to company. I mean as long as the 'pay break up statement' very clearly states that gratuity would not be deducted from the promised gross amount; Is it not all right?

Doubt2:
Then the PF value that is the employer's contribution should have the same treatment on papers; right? Then why do many companies include Company contribution of PF in their offer letters?

Anu, I am sorry if I am confusing the matter further. :confused:



Could any body please provide some literature on this?


Regards,
Kavitha