Understanding Gratuity in CTC: Can It Be Included Before Five Years of Service?

Whether the gratuity amount, which would be paid by the company only after completion of five years, can be included in the CTC? Please briefly explain the purpose of the legislation when enacting this law.

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My job period was 4 years and 10 months (i.e., from 01-10-2005 to 02-08-2010). Am I eligible for gratuity or not?

Understanding Gratuity and Its Impact on CTC

Gratuity is an amount payable by the employer when an employee leaves after being in service for at least five years. The amount of gratuity is based on the salary of the employee at the time of their departure. It does not become due as soon as they complete five years; rather, it becomes due only when they leave. This means it may happen after five years, seven years, ten years, or even thirty years! Is it possible to calculate the gratuity that may become due after ten, twenty, or thirty years from now?

Similarly, there is a provision in the Payment of Gratuity Act which states that gratuity can be forfeited if the employee is dismissed from service due to charges involving moral turpitude, or it can be forfeited to the extent of damages made by the employee to the company, etc. If in the future the employee is dismissed and the gratuity is forfeited, then wouldn't the CTC be different?

Moreover, gratuity, being an amount payable solely by the employer as a reward for long service, should not be recovered from the employee in any manner. Therefore, the gratuity amount should not be included in the CTC.

Regards,
Madhu.T.K

Eligibility for Gratuity

In order to be eligible for gratuity, one should have completed five years of service with every year contributing at least 240 days. Following a Madras High Court verdict, an employee who has completed 240 days in the fifth year is also eligible for gratuity. However, the same need not be applicable in all states.

Regards,
Madhu.T.K

Gratuity Payment and CTC Inclusion

For Amitkudey, gratuity payment won't be included in CTC as per the provisions of the Payment of Gratuity Act. Some companies may pay gratuity by subscribing to an insurance company, in which case it would be included in CTC.

For Sachin Gupta, if you have served the company for 4 years and 10 months continuously and if your records are unblemished, you are eligible for gratuity.

Gratuity Eligibility and Training Periods

Training periods other than as an apprentice under the Apprentice Act will be counted for gratuity.

To determine whether 240 days in the fifth year can be considered as one year for gratuity eligibility, you need to check if any such ruling exists in Uttar Pradesh. In any case, according to the Payment of Gratuity Act, you are not eligible to receive gratuity.

Regards,
Madhu.T.K

What is the proof for "service in the company for 4 years 10 months continuously," and if your records are unblemished, you are eligible for Gratuity, which is shown to the HR department.

Regards,