Can Employees Demand Gratuity Before Completing Service if It's in Their CTC?

Dear Mallik sir,

I would like to have a small clarification regarding CTC. Since the beginning, we have included Gratuity as a part of CTC and have been mentioning it in the appointment letters. My query is whether an employee can challenge us to pay gratuity without completing the service period.

In the CTC section of the appointment letter, gratuity is mentioned, and there is nothing stated against it.

Kindly provide a response.

Thank you, sir.

With regards,

NVRAo
Hyderabad

Hi NV Rao,

Gratuity is an entitlement paid to employees on completion of five years of service, so it should not be included in CTC, which is actually calculated annually. It would be better to mention in the offer letter that gratuity will be paid only if the employee satisfies the gratuity rule.

Ganesh P

Dear NV Rao,

It is not fair and reasonable to include gratuity in CTC. Most companies inflate the CTC by including gratuity. As suggested by Ganesh, it would be better to mention that gratuity will be payable as per the rules.

Including gratuity in CTC can lead to employee dissatisfaction and harm the organization in the long run.

[White Eagle](http://kuldeeprathore.blogspot.com/)

Hi, NV Rao

Gratuity becomes payable upon cessation of service/employment due to any of the following reasons - [Retirement, Resignation, Death, Termination, Total disablement due to accident or disease], regardless of the cause, but only after completion of 5 years of continuous service. Now, I think it will be clear that gratuity cannot be included in CTC. You should change the pattern of the appointment letter so that it will not create any problem in the future.

Fizi

Dear Mr. Rao,

If you have not mentioned the payment terms of gratuity in the appointment letter issued to employees, then an employee can challenge you for paying gratuity even if he/she is not eligible for gratuity because it is part of his/her CTC. Yes, most firms now include in appointment letters and part of the CTC, but they mention the following terms:

"The organization hiring you for a long-term basis and whatever amount applicable to you for gratuity is paid as extra wages, which is being deposited in the firm account. The employee will receive the full amount (calculation as per last drawing salary) only after completion of 5 years or superannuation of the job in our organization or as per the Gratuity Act."

There is no harm in adding this amount; I have seen many cases in the UK which are common in other countries too.

Best Regards,
Sajid Ansari
Delhi

If gratuity is included as part of CTC and the appointment letter is silent on it, then if somebody leaves his services before five years, he will be entitled to the amount deducted.

Sughandh