Gratuity for Late Joiners: Is a 56-Year-Old Employee Entitled After Just 2 Years?

If an employee joins a company at the age of 56 and gratuity is included in the CTC, will he be entitled to the gratuity at retirement after 2 years? How will it be calculated?

Hi, no, any employee after completing 5 years of continuous service with the same employer will become eligible for Gratuity.

Ah ha! This is why people call CTC a scam. The employee will not be completing 5 years of service upon retirement, so he will not be eligible for gratuity (but can receive it in case of his death during employment). However, they will count it as part of the CTC, resulting in the employee receiving less net pay.

Hi, If he continues to be employed after his retirement, i.e., after 58 years, assuming his employment status changes from a regular employee to fixed-term employment, and if he completes five years of service, he will be eligible for gratuity. Furthermore, he continues to be eligible for gratuity in case of death.

Employees should negotiate their gross salary earnings at the time of signing the employment contract rather than focusing solely on the CTC figures.

Regards, Madhukar Gani Sr. Manager-HR Civet Projects Pvt Ltd

Definitely, none of us would prefer the route of death to qualify for gratuity payment. However, the Gratuity Act does not provide any other possibility for those who fall short of the 5-year minimum service requirement to qualify for gratuity payment. The CTC pattern is not recognized under any law in our country.

Current Status and Options

What is the present status? Has he retired on superannuation (at 58) or been allowed to continue? If he is retiring, I would suggest that he officially request the management to consider an 'ex-gratia' payment in lieu of gratuity, based on the grounds that his remuneration package, included in CTC, involved gratuity and it could be proportionate. Alternatively, request the management to extend his services by 3 years to become eligible for gratuity.