Gratuity in CTC: Do We Owe It if an Employee Leaves Before 5 Years?

Question: Gratuity in CTC and Employee Departure

We are showing gratuity in the CTC of employees. Let's suppose an employee leaves the company before 5 years. Do we need to pay them the gratuity amount in F&F, or are we not liable to pay them this amount before 5 years?

Hi, gratuity should not be deducted from the salaries of the employees. If gratuity forms part of the gross salary, then it is considered part of the employee's salary and should be paid back.

However, I presume your employer is making a premium payment to the insurance company for a group gratuity scheme, and the same is reflected in the CTC of the employee. In such cases, there is no need to pay the said amount to the employee before the completion of 5 years. However, if the employee completes 5 years of service, then you are liable to pay gratuity without fail.

Gratuity as Part of CTC

Gratuity can be part of the CTC, but you need to ensure you understand the terms and conditions associated with it. Based on these conditions, you can decide whether payment is required or not.