Can Employers Legally Reduce Gratuity from 10% to 4.81%? Let's Discuss the Rules and Cases

Employer Gratuity Percentage Reduction

Can an employer decrease their percentage of gratuity? Currently, one employer is paying 10% gratuity instead of 4.81%. Can that amount be reduced to 4.81%? Are there any cases where this has been done? Is there any law that prevents an employer from making this change?

I don't know what the significance of 10% or 4.81% in gratuity calculation is. However, in any case, it should not be less than 15 days' salary for every completed year of service, subject to a maximum of Rs 10 lakhs. Salary for this purpose means the salary at the time the employee leaves the company. If your calculation exceeds this amount, you can pay it, no problem. If the practice is to pay a higher amount and the same has been reflected in the offer or contract of employment by way of CTC, then you have to follow that. In order to reduce it, you need to change the conditions of service by issuing notice under Section 9A of the Industrial Disputes Act.

Regards,
Madhu.T.K