Understanding Gratuity: Does the 6-Year Deduction Affect Your Final Payout?

Hi all, I have a confusion regarding the gratuity payout for someone who leaves an employer after 6 years. Suppose Rs. "GD" is the amount deducted annually at 4.81% per year. So with no increment, the total gratuity deduction will be Rs. "6xGD".

After 6 years, he left the company, and the gratuity calculated as per the act will be = Rs. (Last month's salary drawn/26 x 15 x 6 (years)).

Now, my question is, does the total gratuity payout include the total deduction done in 6 years, i.e., 6xGD, or will it be added to the total payout calculated?

Kindly help me with this.

Hi,

No matter what your internal document shows regarding the Gratuity, the amount payable as per the Act will not be disturbed under any circumstances unless, of course, the employer wants to pay an amount higher than stipulated.

Your second point: the last drawn salary per month [Basic+DA]/26 x 15 x number of years completed shall remain as the amount payable in the above case. Gratuity is not supposed to be deducted from the employee's salary at all.

Thanks and Regards

The law regarding the payment of gratuity does not authorize the employer to make any deductions from the employee's pay when gratuity is due.

For the sake of CTC, some firms show Gratuity Contribution as part of it, and it is between the company and employee. The Gratuity Act and Rule have nothing to do with that. However, as far as payment upon retirement or exit, the firm shall follow rules and cannot pay less than what is stipulated as per law.

You may refer to the act and rules at https://www.stacowiki.in/en/acts/st-...tuity-act1972/