Can I Claim Gratuity from My Previous Job in Chennai? Seeking Advice on Eligibility and Process

I recently worked at a reputed company in Chennai for about 9 months and left for a job in the Middle East due to financial commitments. My Cost to Company (CTC) offered in Chennai included gratuity with a monthly deduction. Therefore, I requested the gratuity amount due to me, which is part of my CTC, during my final settlement. However, they did not pay me and informed me that I am not eligible for it.

Gratuity Eligibility and Claim Procedure

Kindly clarify whether I can claim it, and if so, what is the procedure for doing so.

Thanks in advance.

Regards

Gratuity is usually given to employees with longer service tenure (more than 5 years of service). Since you are resigning from your employment after only 9 months, you are not eligible for Gratuity as per the Gratuity Act. It is common practice to include Gratuity in the CTC of the employee. However, I fail to understand when you mention there were some monthly deductions from your salary. Can you clarify this, please? Can you state what was mentioned in your salary slip and appointment letter?

In many companies, although gratuity will be a part of your CTC, it shall not be paid until your career length reaches 5 years in the same organization. Please refer to the appointment letter and the employee handbook regarding gratuity.

Thank you.

Thank you for your prompt response. Actually, my annual CTC was INR 5.6 lakhs with a monthly salary of Rs. 47,000/- (gross), and after PF, Medical, Gratuity, etc., my take-home monthly salary was Rs. 40,000/-. Kindly note that the Gratuity amount was mentioned as Retiral Benefits (Annual) in my AO, resulting in a reduction of Rs. 1,000/- in my monthly take-home salary for about 9 months.

Please clarify whether I can claim this amount, which is a part of my salary.

Thanks in advance.

You are not eligible for gratuity as per the act. Some employers are exploiting employees by including statutory employer payments in the CTC of candidates.

My answer to your query is as follows:

Gratuity Eligibility

Gratuity is payable by the employer as per the POG Act. According to this Act, gratuity is payable at the time of leaving the service after a minimum of 5 years. Since you worked for 9 months, you are not entitled to gratuity from your employer.

Gratuity in CTC

You mentioned that the CTC offered by your employer included gratuity with a monthly deduction towards it. I would like to point out that you may be misinterpreting it. It may not necessarily be your mistake but rather a misunderstanding by your HR personnel who might not have grasped the concept of CTC correctly.

While there may be a reduction in your take-home salary, CTC is not your salary; it is a cost to the company. The employer is required to make provisions for your gratuity from the beginning of your employment by investing in a Gratuity fund. Although there are offsets and adjustments when a member leaves or a new member joins, the employer may not be fully aware of these calculations. Actuarial professionals typically handle these calculations. Therefore, if gratuity is included in CTC, I would not categorically say it is incorrect. However, I do not advocate for the inclusion of gratuity in CTC by the employer. This topic is entirely different and somewhat out of context here.

I often come across such unpleasant situations. I hold the HR person responsible for this as it reflects their failure to understand the concept of CTC. Their typical response is that the boss or employer instructed them to deduct gratuity from your salary.

I have attempted to explain the concept of CTC to HR professionals on several occasions, even on this forum. Unfortunately, the discussions have often been counterproductive or vague. If I recall correctly, I once suggested in one of my posts that members should include a footnote in CTC, stating that gratuity, although considered in CTC, is payable to the employee upon completion of 5 years of service.

I hope my discussion here is not without merit.