Understanding Service Compensation vs. Gratuity: What Benefits Apply to a Resigning Employee?

Hi all, is service compensation and gratuity the same or not? If yes, please clarify. One of our staff worked as a Senior Accountant in our organization; he has completed 7 years of service with our company. Now, he has resigned from his job. His salary is 27,000/- per month with a monthly basic of 4,900/-. What are the full and final benefits applicable to him? Please clarify at the earliest.

MOST URGENT.

Dear Rupesh Kumar, besides his gratuity, the employee is eligible to receive:

(i) Unpaid wages, if any

(ii) Payment in lieu of leave balance in addition to the current year leave accrued

(iii) Any deposits or contributions made in any scheme of the establishment.

Dear Colleague,

Understanding Gratuity

Gratuity is a statutory right of the employee upon his resignation or retirement after completing 5 years of continuous service. It entails 15 days of wages for every completed year of service, based on the last drawn salary (Basic + DA as of now), to be computed and settled.

Settlement of Leave Wages

Apart from this, he has to be settled with Leave Wages for the balance of Annual Leave or Privilege Leave earned, plus his current year leave eligibility for the days worked. His last month's salary for the days worked should be paid. Deductions, such as what he owes to the company, like outstanding loans, have to be recovered from him.

Service Compensation

In the case of the term "Service Compensation," it is discretionary and not mandatory. It depends on your organization's policy and is applicable only under situations or conditions like VRS.

Thanks and God Bless,

Dr. P. Sivakumar
Doctor Siva Global HR
Tamil Nadu