Should Directors of Ltd Companies Be Included for Gratuity? Is It Mandatory?

Should the director of Ltd company also be included for the gratuity? Is it mandatory or not.

Regards,
rishi_p

Dear Rishi,

As far as I know, if the director is an employee of your organization, what I mean here is that he/she should not be an honorary director or, in some cases, a professional director as mandated by SEBI. In that case, gratuity is applicable to him. I request you to refer to the gratuity law for a better understanding of it. It's better to collect multiple opinions on it.

Regards,
Jai

Dear all,

If the gratuity limit is Rs. 3.50 Lakhs, but an individual's basic salary is Rs. 4.0 Lakhs per month, how can we calculate the gratuity in this case? Please clarify.

Is gratuity payable if it exceeds Rs. 3.50 Lakhs?

Thank you,
Majibul - Delhi NCR

Dear Majubul,

Regarding your clarification, it depends on how your gratuity is handled. There are two ways: one is as per the Gratuity Act, and the other is at the employer's discretion. If you wish to fall under the first category, there is a limit of up to 3.50 lakhs. However, if you have entered into any agreement with LIC, such as having a trust deed, there is an option available if the employer wishes.

Thank you.

Dear MK,

Please review Section 2(s) of The Payment of Gratuity Act, 1972. In brief, this is Basic wage plus DA.

Regards,
R.N.Khola

(Labour Law & Legal Consultants)
09810405361

Dear Rishi,

A Director of a company is eligible for gratuity even if they do not have ultimate control over the management of the company. According to the Act (Monitron Securities (P) Ltd v. Mukundlal Khushalchand Dhavan, (2001) 1 Cur LR 507 (Guj)), a Director can still be considered an employee entitled to gratuity.

Thanks,
Sameer

Dear,

This thread relates to gratuity. Therefore, please use the subject matter thread for your query or put your query on a separate thread.