Leaving Your Job: Are You Entitled to LTA and Ex-Gratia Payments? Let's Discuss!

Hi all,

I have recently joined this group and found it to be quite knowledgeable. I need some help.

If we have LTA and Ex-gratia as a part of CTC, is the employee resigning from the organization entitled to the same or not? Are there any legal implications for this, or does it depend on the company's policy?

Thank you.

Dear Sweetu,

You have not mentioned if the resigned employee had completed 5 years of service or not to be eligible for Gratuity. As per a recent judgment, those who have completed 4.6 years are also eligible. I hope you are aware of how gratuity is calculated.

Yes, upon resignation, all employees are eligible for whatever LTA is due to them.

Regards,
AM

Dear Sweetu,

Basically, ex gratia is not a part of CTC. Hence, the question of paying or not paying does not arise. LTA is part of CTC, and it should be paid as per the rules of the company. Ex gratia has no legal implications, whereas LTA, if not paid, will have legal implications.

Regards,
Manoj

I think it is necessary to refer to the contract of employment/terms and conditions of employment. What is included in "PAY" will determine what should be included or not while terminating the contract either by the employer or the employee.

Cyril

Hi Sweetu,

LTA and Ex gratia, if mentioned as part of CTC, are surely due to the employee after resignation (pro rata). Now, more than thinking about legal implications, we must remember that HR has to play a prime role in being ethical.

I saw in replies to you about Gratuity. Gratuity is due after 5 years or 4.6, but if there is any amendment to the Gratuity scheme in your company (please read), then it is due in six months. We had such an amendment in my old company. The calculation was at 4.89% of Basic per month. If gratuity also forms a part of CTC, then the same should be paid to the employee.

Hi Sweetu,

Regarding Gratuity, based on my understanding, legally, all employees (for organizations with more than 10 employees) who have completed their 5-year service period with the company are entitled to receive their gratuity. This amount is calculated using the following formula: Gratuity = (15/26) x Number of years of service x Basic wage at the time of departure.

Regarding LTA, as it is a part of CTC, it must be paid to the employees.

Regards, Sirisha Reddy

Madame,

As part of CTC, LTA, and Ex gratia need to be paid if an employee resigns. Generally, an employee is entitled to LTA after completion of one year if the policy states so. Ex gratia, if mentioned in your letter of appointment, then yes, it needs to be paid. However, if it is declared at a specific period, such as during Diwali or Dussehra based on the company's performance, then only employees on the payroll are entitled.

Regards,
Jitendra

In calculating gratuity, both basic wage and dearness allowance are taken into consideration. The monthly wage is divided by 26 to arrive at the daily wage, which is then multiplied by 15 days for each completed year of service, subject to a maximum gratuity of Rs 3.50 lakhs.

Cyril

Hi,

BOTTOM LINE.

Anything that is mentioned in the CTC is due by the company. If your company deducts Gratuity amount from the salary, even that amount is payable when the employee leaves (the deducted amount).

If the person has served more than 4.6-5 years in your company, a proper gratuity calculation has to be done according to labor laws and paid in full. Also, the gratuity amount can be more than 3.5 lakhs; there is no upper limit to the gratuity amount. The only thing is that anything above 3.5 lakh is taxable.

Regards,
AJ

Hi All,

Greetings from me!

In one of my friend's offer letters, it was mentioned that the Annual payout for LTS and ex-gratia will be given, which makes it a part of her CTC. How can she claim this ex-gratia amount annually?

LTA APPLICABLE?

Similar is the case with me. However, I was in the company for a period of 10 months. I was in a company (private bank) from May 2007 to March 2008 in Mumbai. I was on probation from May to November 2007 and confirmed w.e.f. November 2007.

The attachment was my salary structure in the previous organization where the LTA was also included in my Annual CTC. You may also refer to the same.

After submitting my resignation and before the full and final settlement, I had orally asked HR for payment of LTA. However, HR informed me that this is applicable to employees who have completed one year of service.

My appointment/offer letter of my company stated the following with respect to LTA.

"You are entitled to claim LTA only after completion of one year of service in the company."

Can you confirm whether I can claim LTA from them, and if they inform me that I am not eligible, how should I proceed further in the matter to claim LTA?

Thanks & Regards Srinivas Mani +91 9833418230 Email: shrinivasmani@yahoo.com

Yes, if LTA/C is under CTC and if not mentioned the terms of eligibility, then whatever months he/she works, has to be paid. Otherwise, follow the Appointment Letter if any condition is mentioned for LTA payment.

Hi,

I was working in a company (Pvt. Sector bank) as a Manager from May 2007 to March 2008, where they had mentioned that LTA is applicable to a confirmed employee only after completion of one year of service.

I have left the said company in March 2008. However, the company says that LTA can be claimed only after one year. I joined the company on May 9, 2007, and was on probation until November 2007, after which I was confirmed. I left the job in March 2008. As per you, I can claim LTA. Is there any act on the basis of which I can claim? The FY 2007-08 has also passed; would they give it? They have not given it as part of the full and final settlement, saying that it can be claimed only if a person has worked for more than one year.

The following was my salary structure in the previous organization where the LTA was also included in my Annual CTC. I have also attached a file stating the salary. You may also refer to the same.

Monthly Salary

Type of Salary Per Month
Basic Salary 14670
Conveyance 800
HRA 8500
Medical Reimbursement 1250
Other Allowance 7560
Sodexo Meal Coupons 910
Provident Fund 1760
Leave Travel Allowance Monthly Salary 35450

Annual Salary

Type of Salary Per Annum
Basic Salary 176040
Conveyance 9600
HRA 102000
Medical Reimbursement 15000
Other Allowance 90720
Sodexo Meal Coupons 10920
Provident Fund 21120
Leave Travel Allowance 14670
Annual CTC 440070

After putting my resignation and before the full and final settlement, I had orally asked HR for payment of LTA. However, the HR informed that this is applicable to employees who have completed one year of service.

However, I have been informed by one of the members of CiteHR that since LTA was a part of my CTC, which was agreed at the time of appointment, I will be entitled to LTA after one year of service because it is normally a yearly paid benefit. But in the case of Full & Final settlement, I have the right to claim all due amounts till the date I served with the company. It is another matter that it will be taxable.

Kindly clarify, can I take up the matter with the company on this point.

Thanks & Regards,
Srinivas Mani
09833418230

Dear Sweetu,

Yes, ex gratia, bonus, and LTA are part of CTC. When an employee resigns, that amount needs to be paid in the form of full and final settlement form.

Hi All,
I just started working on revamp of existing policies, i come from a pure recruitment back ground and i wish expolre in core areas of HR. Can you guys share me some sample LTA policies?

Lakshman Kodupaka
Asst Manager- Recruitments,
SemanticSpace Technologies,
5th Floor, DHFLVC Silicon Towers, Madhapur Road, Kondapur, Hyderabad – 500032, AP, India.
Phone: +91-40-39991580| +91-40-39991999 Extn 1580
Mobile: +91 - 9949794550
Visit us at www.semanticspace.com

Hi all,

The employee needs to go through their employment details to review the salary components and the CTC that have been accepted. Employers should make all payments in accordance with the employment terms, and calculations should align with the applicable laws in the country and the employer's rules. However, it should be noted that the company's internal rules should not supersede the provisions in the relevant government laws and rules.

When it comes to the final settlement upon leaving an organization, the following issues will come into play:

1. LTA - Payable as per the employment contract.
2. Leave Encashment - Payable as per the organization's policy and the provisions in the relevant Acts such as the Factories Act, Shops & Establishment Act in India. The calculation method will be as per the policy or the relevant Acts.
3. Ex-gratia - Payable prorata as per the terms of employment.
4. Gratuity - Governed by the Payment of Gratuity Act in India and payable as per the stipulated provisions. Upon completion of 4.6 or 5 years in the company, the employee leaving is entitled to gratuity.
5. Salary - Payable for the part of the month if advance notice was served to the employer as per the terms of the Employment Contract (Appointment Letter / Confirmation Letter).
6. Bonus - As per the provisions of the Payment of Bonus Act and the Employment Contract.

I have corrected the spelling, grammar, and punctuation errors in the text while maintaining the original meaning.