Is It Necessary to Include a 56-Year-Old New Hire in the Gratuity Scheme Before Retirement?

An employee, born on 1/1/1963, joined an establishment on 01/09/2018 and is bound to retire upon reaching the age of 60, i.e., on 31/12/2022. He will not complete 5 years of qualifying service for gratuity. The organization has opted for a group gratuity scheme from LIC.

Question: Is it mandatory to include him in the group gratuity scheme?

Hi,

It would be wise and prudent on the part of the company to include the employee in the group gratuity scheme. Remember, even death or permanent disability is covered under the scheme, and the family may receive the benefits in the event of any unfortunate circumstances. There is nothing to lose if you include them, but it may have consequences if you do not.

Thanks and Regards

There are many incidents where the employee is working after 60-62 and 65 even, as the employer is not ready to relieve the employee. There must be something special in that employee that he was considered at 56 years of age. At this stage, it is tough to say that he would get retired in 2022; it would be up to management to decide whether to relieve him or not. So, adding him to the Group Gratuity is a wise decision.

It depends on the retirement age of your establishment. If it is 60 and there is no scope for an extension of service, then do not offer the policy to employees who are not eligible for gratuity upon cessation of service as they would not fulfill the criteria.

Regards