Understanding Gratuity: Is It Employer-Paid or Deducted from Your Salary?

Gratuity Payment by Employer

1. Is gratuity given by the employer, or will it be deducted from the employee's salary and given back to the employee after completing 5 years?

2. Suppose an employee has completed 2 years, and by then the employer has not deducted the gratuity amount from the employee's salary. Can the employer now ask the employee to pay back the gratuity amount for the past 2 years, which will only be given after completing 5 years?

It's been paid by the employer after the completion of 5 years of continuous service. There is no deduction from the employee.

Gratuity is a lump sum amount given by an employer, computed as per the formula under the Gratuity Act at the time of resignation, retirement, or disability, provided the employee has completed a continuous service of five years. It is not subject to any deduction from the employee's salary.

Regards,
B. Saikumar
HR & Labour Law Advisor
Mumbai
[Phone Number Removed For Privacy Reasons]

Do you have any idea about the gratuity premium paid by the employer? What is the formula for gratuity deduction from the employer?

Regards,
Ganesh

Gratuity is a retirement benefit paid by the employer when the employee serves a minimum of 5 years in the organization. The employee will not have any amount deducted for gratuity.

Gratuity Payment Clarification

There is no question of the employee paying for gratuity. The employer is only liable to pay the gratuity amount to the employee if the employee serves 5 years in the organization.

Gratuity Calculation

Gratuity will be paid by the employer as follows: Last drawn Basic + DA / 26 * 15 * Number of years (Minimum 5 years)

Regards