Gratuity and Employee File Questions: What Are the Legal Requirements and Best Practices?

Good morning everyone, I request you to clear the following doubts regarding gratuity:

Gratuity Provision in Appointment Order

1. In the appointment order, no terms are mentioned to provide gratuity for employees working more than 5 years. In that case, is the company mandated to provide gratuity? Please clarify.

Documents to Maintain in Employee File

2. In the employee file, which documents are to be maintained?

Draft for Increment Letter

3. As we are providing an increase in the salary slab, I require a draft of an increment letter for the teachers, drivers, and housekeeping staff.

Hi,

Gratuity Payment Requirements

1) Whether it is mentioned in the appointment letter or not, gratuity payment is compulsory. Gratuity must be paid by companies that have hired ten or more employees. Employees must have completed 5 years of continuous service within an organization to be qualified for gratuity.

Employee File Documentation

2) All employee-related correspondences should go into the employee file.

Increment Letters

3) Increment letters are company-specific, and there is no predefined format for increment letters. You may find a lot of templates online that you can edit and use.

Gratuity and Its Mandate

Gratuity is mandated by the Payment of Gratuity Act. It is applicable even if it is not mentioned in the appointment letter, policy, etc.

Documents in Employee Personnel Files

Employee personnel files will have various documents, and the institute/organization takes a call on the following basic documents:

- Application form filled by the employee while joining
- Employee data
- Copies of the appointment letters/Increment letters/Promotion letters/Notices, etc.
- Address & ID proofs
- Copies of educational proofs
- Nomination forms such as Gratuity, ESI, EPF, Payment of wages, etc.
- Others as applicable

Hi Lavnya, When it comes to gratuity, the company is required to pay the employee after the completion of a 5-year period at the rate of 15 days' salary per year based on the gross amount. This calculation should be done for 26 days, excluding Sundays.

Employees should have all the necessary documents related to them, such as their resume, educational certificates, previous experience certificates, training records, awards received, and any increment letters, regardless of their staff type. The HR procedures remain the same.

I hope this clarifies any doubts you may have.

Thank you

Gratuity in Appointment Letters

1. Payment of gratuity is also a statutory payment, like PF and ESI, which need not be mentioned in appointment letters, in general. However, appointment letters are company-specific formats, and some companies may choose to mention it.

Documents to Maintain in Employee Files

2. Starting with a copy of the advertisement, copy of the call letter, interview assessment form, recommendation for employment/approvals, candidates' application form, personal data form, copy of offer letter/appointment letters duly acknowledged by the employee, joining report, copy of the induction program, copies of testimonials of academic, technical, and professional qualifications and work experience, photographs, copy of the medical fitness report, ID and address proof, contact details (address, mail ID, mobile number of the person to be contacted in case of any emergency), nomination forms of gratuity, etc.

Formats for Increment Letters

3. There are a lot of formats in the Cite HR forum for increment letters; you may select one which will be best suited to you.