Payment of Gratuity - If an employee left the company before completion of 5 years

Dear Sir,

During the negotiation, if the company has taken a gratuity amount towards the CTC (as a part of CTC), if an employee left the company before completion of 5 years, is the company liable to pay gratuity as a part of CTC? (Not under the Payment of Gratuity Act) Please confirm.

The Payment of Gratuity Act stipulates that gratuity would be disbursed for every employee who completed five years of continuous service. If you do not complete five years of service in a company, you would be forgoing this gratuity amount irrespective of the fact that your ACTC includes gratuity amount. Furthermore, no act stipulates guidelines for ACTC and its calculations. Also, you cannot question that ACTC was underpaid in any forum of law. If you raise a dispute before the labor officer concerned, at worst, he can request the management to pay this gratuity amount. However, if the management does not concede to the request, you cannot escalate this issue.