We have made gratuity is the part of CTC - is it mandatory to pay if employee is leaving before 5 years?

Dear Seniors, We have made gratuity is the part of CTC & it is mentioned in our offer letter so is it mandatory to pay if employee is leaving before 5 years?

Hi....

If employee is not completed 5 years or 4 year 7 month, he is not eligible for gratuity,

therefore no need to pay ...

Dear Sir,

Asper The payment of gratuity act 1972, there is no need to pay gratuity to him because he is not completed 5 years of service.

Thanks,

Dear Sir ,

We have shown gratuity is the part of his CTC its mention on his offer letter & we re deducting some amount every month .

Dear Sir,

Your query is not clear. Asper Gratuity act you need not to pay gratuity to him because he is not eligible but you had mentioned the amount in offer letter\appointment letter part of CTC. So you are liable to pay gratuity as per contract. He can't claim gratuity as per gratuity act but he can claim asper contract.

Thanks,

Dear Friends,

CTC means Cost to company, hence all the cost's which company/organization/establishment spending on the premium should be considered into the CTC.
If an employee not completing the basic requirement of eligibility of 5 years of service (4 year and 240 days) then he/she not eligible to get anything under gratuity, though it is mentioned in CTC annexure attached with Appointment order.

Nandkishor

The term CTC is more confusing than clarifying, CTC is only the computed cost arrived indicating the per head expenses of the organisation for its manpower, it includes not only the direct benefit which the employee gets every month so also the proportionate cost for indirect employee benefits like transport, canteen, medical, township, social clubs, associations etc., etc. The employee doesn't get these indirect benefits in hand like the employer's share of PF, the annuity paid for gratuity etc. But they are reckoned.
The eligibility for gratuity is only after completion of the required length of service and it is not paid before as pointed out above. But still is an expense borne by the company and would come into calculation of CTC. So it is only an indicative figure and what the employee actually gets as gross pay is different.

First of all first get what is the meaning of CTC - COST TO COMPANY which means the yearly expenditure that a company spends on an employee. Each employee spend depends on their salary and variable i.e package for the job offering . As far as Gratuity is concern its a variable payout which is usually paid after the completion of certain period of service,if less than that no payment should be done and one thing more this variable payout is not any certain percentage of Gross Salary of an employee but its a fund created by employer either of establishment or through insurance policy. By the way Defination of GRATUITY specify is a financial component offered by an employer to an employee in recognition of his/her service rendered to an organisation. Payable on superannuation,retirement,resignation,Death for payment 5 years of service.
Thanks & Regards,
From,
Sumit Kumar Saxena

Dear colleague,

It is to be clearly understood that reckoning Gratuity cost as a part of CTC is well justified. The company's are required to make financial provisions either creating fund for it or linking with insurence company.

Its justification and liability arises from the fact that it becomes payable to the employee's heir or nominees, in case of his/her death after joining irrespective of the length of service.

However, in case any employee gets septerated before putting in five years' of eligible service, he is not eligible for it , notwithstanding gratuity being considered as a part of CTC.

Regards,

Vinayak Nagarkar
HR and Employee Relations Consultant