Is It Fair for Companies to Deduct Gratuity from CTC and Pay After 5 Years?

Hi Seniors, my company deducts a certain amount from the CTC monthly as a percentage of Gratuity (5% of Basic), and they will provide this once an employee completes 5 years. My question is, is it right for a company to deduct an amount for Gratuity in its own CTC and provide it after 5 years? Can you tell me what the source of gratuity for the employee exactly is?

Thanks,
Senthil

Gratuity is payable only when an employee completes 5 years of continuous service. If an employee leaves the company before 5 years, then the employee is not eligible for gratuity, irrespective of whether the same was part of the employee's CTC or not.

I can understand that. What if the employee has not completed his 5 years and his gratuity is not given in the Full and Final settlement?

Hi Senthil, you have a point, but unfortunately, gratuity becomes payable only when an employee completes 5 years of continuous service with the same employer. If anything falls short, nothing gets paid. However, since a portion of your CTC includes the gratuity part, and the CTC is a package remuneration per month, it may be reasonable to claim it when you leave before completing 5 years. I think somebody who leaves thus should claim it and see what happens.