Is Our Startup's Gratuity Deduction Valid with Only 7 Employees? Seeking Clarity!

I work for a startup that is a subsidiary of a listed company. Currently, in the startup, we have 7 employees, out of which 4 have been transferred from the parent company and have been working there for more than 5 years. The other 3 are new employees. We plan to have around 50 employees by the year-end and a total of 150 by the end of 2 years. Currently, deductions are being made from our CTC for gratuity.

Gratuity Act Applicability

My queries are as follows: Is the Gratuity Act applicable to this startup, given that we have only 7 employees as of now? If it is not applicable, then what happens to the deduction on account of gratuity for the old employees?

Request to please answer.

As per statutory regulations, a minimum of 10 employees is necessary. In your case, there are only 7 employees, but since your employer is deducting some amount in the name of gratuity, you can claim gratuity from the employer.

Thanks and Regards,
Narendar

In such a case, the gratuity deducted is an incorrect deduction, and one can inquire about the funds collected as gratuity. The employer can later refuse to pay as it was not applicable as per the law.