Why Are Some Companies Deducting 4.81% for Gratuity and What Can Employees Do About It?

Understanding Employee Contribution to Gratuity

Why should an employee contribute to gratuity? Are there exceptions to the rule which allow some companies to deduct 4.81% of the basic salary towards gratuity?

Steps to Take if a Company is Deducting 4.81% Towards Gratuity

What should one do if a company is deducting 4.81% towards gratuity?

Changes in the Gratuity Act

Is there any change in the Gratuity Act? According to me, employees do not contribute to the gratuity fund.

Regards

Understanding Gratuity as an Employer's Liability

Legally, gratuity is the employer's liability. The employee has nothing to do with it. Few companies do show gratuity benefits in the offer letter or annual salary break-up, but that does not mean it's the employee's money. That's purely a way of inflating the CTC figures.

You cannot do anything if it is mentioned in the offer letter or annual salary break-up. You can legally sue your company for gratuity benefits if they are mentioning the same in the monthly pay-slips alongside other deductions like income tax, professional tax, and PF deductions.

Regards,
Gaurav