When is it mandatory for a company to introduce the Gratuity Scheme? Are there any fund schemes like PF where the company can deposit the monthly gratuity amount?
Gratuity is compulsory for all companies to pay employees who work in the same organization for at least 5 years of service and have resigned from the company. Gratuity is calculated at 4.81% of the Basic salary and can be deposited at any Nationalized Insurance company.
Gratuity is a statutory requirement. You can check with your insurance company to determine the frequency of paying the premiums. Generally, companies pay the premium on an annual basis.
We have a staff of 50 employees, and we have been in business for the past four years. Could you please advise if it is mandatory for us to introduce gratuity? Currently, there is no provision for gratuity in our accounting books.
Additionally, can we include gratuity (4.81% of basic) in the CTC?
Thank you.
Ruby
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