Gratuity Eligibility Question: Does Onsite Work Affect 5-Year Service Requirement?

Dear Seniors,

I am having a few doubts with respect to the payment of gratuity. One of my employees has completed 5 years of service, out of which he was onsite for 3 years. Now, I wanted to know if he is eligible for gratuity.

Kindly help me with this.

Awaiting your guidance.

Regards,
Sara

I have a very important question. My uncle used to work for a pharma firm in Ahmedabad. He is illiterate, so he was not aware of any forms that the company filled up on his behalf, like ESI, PF, and all. Now, he has left the company after working for 15 long years, and he is not physically fit. When I jumped into the matter to know the exact thing that was delaying the PF withdrawal, I got the PF slip from the company, and it is showing his nickname instead of his registered name. Because of this reason, now I am unable to proceed ahead, and the name that his bank account has is different from the one shown in the PF record.

Can you please guide me on the exact procedure on how to take care of the whole issue? What is the procedure by which I can go to the PF office and change, or we can say correct, his name?

Thanks, Asia Sheikh

Hi Sara,

If the employee is on the rolls of the same company, and the company is paying for his duties onsite, that implies he has completed 5 years of service with the same company, making him eligible for gratuity benefits. It does not matter whether he worked indoors or on site; what matters is whether he worked for the same establishment/company and the same company paid him wages for all his services, which is crucial for calculating the service period.

Mohan Rao
Manager HR

Hi Sara,

If the name and style of the organization are one, and the employer is one, and when the business is one, then the service is also one to be counted. Whatever you pay, you have to settle on the basis of his last paid salary, i.e., Basic and Plus DA if paid at the time of his settlement.

Mohan Rao
Manager HR

Dear Sara,

Yes, he is eligible for gratuity because he has completed five years in the same organization.

Dear,

Please go through Section 4 of the Payment of Gratuity Act, 1972 for knowledge on the calculation of the gratuity amount.

With Regards,
R.N.Khola

Things to remember:

Gratuity is paid for good service.

1. If an employee has completed 5 years of continuous service in an establishment, they are eligible for gratuity.

2. Entitlement: 15 days' salary for each completed year of service or part thereof.
Salary = Basic Salary + D.A.

3. As per the Payment of Gratuity Act, 1972, the amount of gratuity should be calculated as follows:
Formula: Salary x number of completed years of service x 15/26

For example:
Salary = Rs. 5000 (Basic + D.A)
Period of service: 6 years, 6 months, 15 days
Completed years of service: 7 years
Gratuity = Rs. 5000 x 7 x 15/26
= Rs. 20,192/-

I hope the concepts have been clarified for you.

Thanks and regards,
Cell No. 9443328010

Things to remember: Gratuity is paid for good gratitude.

1. If an employee has completed 5 years of continuous service in an establishment, they are eligible for Gratuity.

2. Entitlement - 15 days' salary for each completed year of service or part thereof. Salary = Basic Salary + D.A.

3. As per the Payment of Gratuity Act, 1972, the amount of gratuity should be calculated as follows: Formula: Salary x number of completed years of service x 15/26

Say, for example: Salary = Rs. 5000 (Basic + D.A.) Period of service: 6 years 6 months 15 days Completed years of service: 7 years Gratuity = Rs. 5000 x 7 x 15/26 = Rs. 20,192/-

Hope the concepts have been clarified for you.

Thanks and regards, Cell No. 9443328010

Shesh Nath Singh

Dear Sara,

If an employee has completed continuous service of 5 years, he is eligible for gratuity. It is irrelevant whether he has worked on-site or otherwise. The place of working is not important. Completion of 5 years of continuous service in one establishment/factory/organization/company is important. I think your doubts might have cleared now.

Please feel free to call in case you need any further clarification on my cell 9443328010.

Thanks and regards,

Hi,



Check this policy i made it for my company.Hope it is usefull for you.

Employee Pension Scheme:-



Objective:-

Employees' Pension Scheme-95 came into effect from 16.11.95. The Employees' Pension Scheme-95 has been conceived as a Benefit defined Social Insurance Scheme formulated following actuarial principles for ensuring long term financial sustenance.



Applicability of the Act:-

The Scheme on its introduction applied on compulsory basis to all the new members of Provident Fund and the existing members who were contributing to the Employees' Family Pension Scheme-1971.



Contribution:-

· No separate contribution is payable additionally by the member for the Pension Scheme benefits. Out of the Employer contribution of 12% towards provident fund, 8.33% is diverted to Pension Scheme and balance 3.67% will be in credit of employee’s name in Provident Fund account.

· If some employers are paying contribution on salary in excess of Rs. 6,500, the excess contribution will be credited to Provident Fund account and not to Pension Scheme.

· No separate administration charges or inspection charges are payable, as these are already paid along with Provident Fund contribution.



Benefits:-

Newly introduced Employees' Pension Scheme-95 provides for following benefit package:

1. Pension for life to the member, on superannuation/retirement and invalidation.

2. To the members of the family upon death of the member:

a. Pension to Widow/Widower for life or till re-marriage.

b. To children/orphan, two at a time additionally upto 25 years of age simultaneously with widow/widower pension.

c. Facility for payment of pension to nominee in the event of member who is unmarried or without any eligible family member to receive pension, and

d. Facility for payment of pension to dependent father/mother in the event the member dies leaving behind no eligible family members and no nomination by such deceased member exists.

3. Scheme Certificate to retain membership of the Scheme till attaining the age of 58 years.







Superannuation/retirement pension under the new scheme will be payable on fulfilling:-

a. Minimum 10 years eligible service and

b. Attaining age of 58 years.

On ceasing employment earlier than 58 years, pension may be availed of by a member at his option, before attaining the age of 58 years but not below 50 years. Such early pension will be subject to discounting factor. However, no such age restriction or eligibility requirement shall apply for pension entitlement on disablement or pension payable to the family members on death of the member. Membership with one contribution is enough in such cases.

Thanks & Regards

Sharen Garg

Hi, Asia,

At the time of employment, employees with a lack of awareness often give their names casually. This practice is prominent in areas where the workforce is illiterate or semi-literate. But nothing to worry about; there are solutions.

Your uncle has to produce his bank passbook with a Xerox to the employer and request a correction letter addressing the EPFO, stating clearly that the 'nickname' and 'real name' belong to the same person with this PF account number and that his PF dues should be settled and posted in his 'real name' account (Certified by the employer's signature and seal). In addition to the statutory withdrawal forms, you have to submit this letter to the PF authorities.

Best of luck (Suresh)

Gratuity Calculation: Last drawn (Basic + DA) * 15 * Number of Years / 26.

15 days' wages for every completed year of service. 26 represents the number of working days.

Gratuity is not taxable.

Charvaka Reddy

Hi akesiss,

If any employer refuses to make payment of gratuity to an employee who has completed a term of 5 years of continuous service with him/organization, it amounts to punishment. For this, you should refer to Section 9 'PENALTIES.'

An employer avoiding any payment to be made under this Act, who contravenes or makes default in complying with any of the provisions of this Act or any rule or order made thereunder, shall be punishable with imprisonment for a term not less than three to six months, which may be extended to two years, and also with a fine of Rs. 10,000.00, extendable to Rs. 20,000.00.

Mohan Rao Manager HR

The gratuity payable to an employee may be wholly or partially forfeited if:
(i) the services of such employee have been terminated for his riotous or disorderly conduct or any other act of violence on his part, or
(ii) the services of such employee have been terminated for any act which constitutes an offense involving moral turpitude, provided that such offense is committed by him in the course of his employment.

Please let me know if you need any further assistance.

The gratuity payable to an employee may be wholly or partially forfeited:

(i) if the services of such employee have been terminated for his riotous or disorderly conduct or any other act of violence on his part, or
(ii) if the services of such employee have been terminated for any act which constitutes an offense involving moral turpitude, provided that such offense is committed by him in the course of his employment.

Hi,

If the employer refuses to give the gratuity, what is the next step that has to be taken?

Dear,

If the employer refuses to give the gratuity, then you are to file a claim before the Controlling Authority under The Payment of Gratuity Act of the area. You can also file a complaint before the law enforcing agency before filing the claim case.

With regards,

R.N.Khola

Gratuity Payment would entail continuous service for 5 years, which in the case of an onsite assignment becomes a bit of a tricky issue.

The position is: if the person is on a social visit pass/business visa and earning a salary back in India from the Indian company, then it is considered continuous service. The moment this consultant starts working on a work permit - which is usually the case for long assignments (typically more than 6 months) - then technically there is a severance from the Indian payroll (during which his/her Indian salary stops; therefore, PF stops, gratuity stops, and probably the medical insurance will also stop).

This is what my experience says....

A. Chakraborty

Hi,

He has completed five years of service. Then there is no question of eligibility. Yes, he is eligible for Gratuity.

Mano Kavin

Dear Sara,

Gratuity

Any employee who has been on the rolls of the company and has put in 5 years of continuous service is entitled to receive gratuity. It does not matter if someone has been on duty on site.

Vasant Nair
09717726667

I have one query. I want to know if gratuity is given on gross salary or if it is given on basic + DA. Please reply soon. Thank you.