Gratuity Dilemma: Should Long-term Contract Employees Follow Agreement or Standard Rules?

Dear all,

Let us discuss an interesting case here. A company had appointed an MD on a fixed-term contract for 4 years and further extended it for another 3 years. In the agreement clause for gratuity payment, it was mentioned as 4.15%. The company again renewed the contract for two more years, and the gratuity clause mentioned 2 months of the basic rate. Now, the question is whether the employee should be paid gratuity as per the agreement or as per the gratuity rules, i.e., continuous service for 9 years and the average salary of the last one year?

Thank you.

Gratuity will have to be paid as per the Payment of Gratuity Act. One cannot contract to pay less than the legal entitlement where it is specified how gratuity is to be worked out.

I think it would be the amount in the agreement or the amount computed in the method specified in the act, whichever is higher.

It will be the amount as per the Gratuity Act or the amount as per the latest agreement, whichever is higher and more beneficial to the employee.

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It will be the amount as per the Gratuity Act or the amount as per the latest agreement, whichever is higher and more beneficial to the employee.