Introducing Gratuity for Gurgaon Staff: How Should Eligibility Be Determined for Long-term Employees?

Dear all,

I work for a software company with two offices, one in Bangalore and the second office in Gurgaon. We would like to introduce gratuity for our Gurgaon staff. Gratuity for Bangalore staff is already in place, and the way we manage gratuity for Bangalore staff is as follows:

Gratuity is part of the CTC. It is deducted from the salary and paid back to employees when they leave, irrespective of the number of years completed. The 5-year rule is not mandatory.

Now we would like to offer a similar benefit to our Gurgaon staff at par with the Bangalore staff. The current headcount is 13, and the headcount in the previous years was less than 10. Gratuity has not been deducted for Gurgaon staff as we have done for Bangalore staff. There are employees who will be completing 5 years in April 2010.

My question is: If we introduce gratuity benefit now, what will be the eligibility level for Gurgaon staff? For example, if an employee (who joined in 2005) leaves the organization in 2010 (after completing 5 years), will he/she be eligible for gratuity for 1 year (i.e., from this year, because we are introducing it now) or from the date of his/her joining?

Appreciate your inputs.

Thanks,
Vijaya

Dear Vijaya,
This is highly unlawful action on the part of the management to deduct gratuity from the salary of an employee. On the other hand the gratuity is to be paid to the employee or the nominee/ legal heirs as the case may by the management on becoming payable under the Payment of Gratuity Act, 1972. It is not just like PF ESI which is to b e deducted from the wages of an employee. You may your self go through this Act & try to find out such type of provision. This Act become applicable from the date when 10 or more employees are employed by the management & thereafter within 30 days you are to give information to the Controlling Authority of the area in Form ‘A'. You may also discuss the matter with the law enforcing agency here at Gurgaon.
Opinion submitted as requested.

Regards,
R.N.Khola
Skylark Associates, Gurgaon(Haryana)
(Labour Law & Legal Consultants)
09810405361

Hi,

Deducting gratuity from an employee's salary is unlawful. Kindly ensure compliance with the legal stipulations outlined in the Payment of Gratuity Act, 1972.

Regards,
Maahiein

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