Gratuity Dilemma: Should We Pay New Employees Who Leave Before 5 Years?

Dear Sir,

My company provides a CTC breakup (on a monthly and yearly basis) to new join employees. In the breakup, gratuity is mentioned. However, if a new employee leaves the company before completing 5 years of service, what should I do? Should I pay the gratuity amount or not?

I am seeking your guidance on this matter.

Thank you,
Sanjay

Hi,

I hope this may help to clear all your worries.

Section 4: Payment of Gratuity.

Gratuity shall be payable to an employee upon the termination of his employment after he has rendered continuous service for not less than five years, -
(a) on his superannuation,
(b) on his retirement or resignation,
(c) on his death or disablement due to accident or disease:

Provided that the completion of continuous service of five years shall not be necessary where the termination of the employment of any employee is due to death or disablement.

It clearly states that if the employee is resigning from the organization before five years, it is not mandatory to pay the gratuity amount to that employee.

Hope this has solved your problem.

Regards,
Prince