Gratuity Deductions: What Happens If You Leave Before 5 Years?

Hi all,

If gratuity is being deducted from the monthly take-home pay, will the employer be liable to pay for gratuity if the employee leaves the organization before 5 years? If not, what happens to the amount that is being deducted towards gratuity?

Gratuity Deductions from Salary

No deductions of gratuity must be done from the salary of the employee. The practice of deductions from an employee's salary is not in accordance with the law.

When an employee fulfills the conditions as stipulated by the Gratuity Act, he/she will receive gratuity as per the same. Gratuity payability is the accountability of the employer.

Under no circumstances should the gratuity amount be deducted from the employee's salary (monthly/quarterly, whatever may be the case). The employer is required to make provisions for gratuity in their company accounts so that in the future, when the need arises to pay employee gratuity, they are not burdened by the same.