Dear Seniors, Thank you very much for all your inputs. Really now I am clear with it. Atool Singh Sir thank you for your detail explaination. Thanking you all Regards Nidhi
From India, Ahmadabad
2From India, Ahmadabad
Their is no ANY DEDUCTIONS in salary for gratuity. It’s purely an EMPLOYER’S CONTRIBUTION for the gracious service rendered by the employee to the organization.
From India, Tiruchchirappalli
From India, Tiruchchirappalli
Dear Kumaresank,
I agree to you.
But have seen in many companies where they include the gratuity amount in CTC.
So point comes here that if that person leaves after 2 years of service he can demand gratuity amount ?
I think company cannot argue by saying gratuity can b given only for continous 5 years of service.
Kindly give me your inputs.
Regards
Nidhi
From India, Ahmadabad
I agree to you.
But have seen in many companies where they include the gratuity amount in CTC.
So point comes here that if that person leaves after 2 years of service he can demand gratuity amount ?
I think company cannot argue by saying gratuity can b given only for continous 5 years of service.
Kindly give me your inputs.
Regards
Nidhi
From India, Ahmadabad
Dear Nidhi,
When employee resigns after 2 years he can claim for payment of gratuity if it is a part of the CTC.
In the above case it is called compensation in lieu of gratuity. For example:
Annual Basic of an employee for 1st year : Rs. 100
Annual Basic of that employee for 2nd year : Rs. 200
So compensation in lieu of Gratuity to be paid to that employee for 2 years on the basis of his resignation shall be:
Rs. 100 * 4.81% = Rs. 4.81 for 1st year
Rs. 200 * 4.81% = Rs. 9.62 for 2nd year
Total Rs. (4.81+9.62) = Rs. 14.43 shall be paid to that employee towards compensation in lieu of gratuity
From Korea, Seoul
When employee resigns after 2 years he can claim for payment of gratuity if it is a part of the CTC.
In the above case it is called compensation in lieu of gratuity. For example:
Annual Basic of an employee for 1st year : Rs. 100
Annual Basic of that employee for 2nd year : Rs. 200
So compensation in lieu of Gratuity to be paid to that employee for 2 years on the basis of his resignation shall be:
Rs. 100 * 4.81% = Rs. 4.81 for 1st year
Rs. 200 * 4.81% = Rs. 9.62 for 2nd year
Total Rs. (4.81+9.62) = Rs. 14.43 shall be paid to that employee towards compensation in lieu of gratuity
From Korea, Seoul
Dear Soumya,
Yes about CTC it is clear.
So, even if an employee resigns after 7 years in a company and the system in the company is they include gratuity amount in CTC then calculation will be done as above shown by you.
But if the gratuity amount is not included in CTC , then when they resign after 7 years it will be entirely calculated on
last drawn salary/26*15days* no of years of service.
What I said is right ?
With best regards,
Nidhi Shah
From India, Ahmadabad
Yes about CTC it is clear.
So, even if an employee resigns after 7 years in a company and the system in the company is they include gratuity amount in CTC then calculation will be done as above shown by you.
But if the gratuity amount is not included in CTC , then when they resign after 7 years it will be entirely calculated on
last drawn salary/26*15days* no of years of service.
What I said is right ?
With best regards,
Nidhi Shah
From India, Ahmadabad
Hi Nidhi,
In case the Gratuity component is mentioned in the CTC structure, the co. is liable to pay the amount deducted till the date of his employment irrespective whether the employee has completed 5 years. Denial by the co. can lead to legal proceedings where the employee is most likely to be the winner.
Regards
Amitava
From India, Calcutta
In case the Gratuity component is mentioned in the CTC structure, the co. is liable to pay the amount deducted till the date of his employment irrespective whether the employee has completed 5 years. Denial by the co. can lead to legal proceedings where the employee is most likely to be the winner.
Regards
Amitava
From India, Calcutta
Dear Amitava, If not included in CTC then also the company is liable to pay gratuity amount. It is mandatory. Certain provisions to be made before hand. Nidhi
From India, Ahmadabad
From India, Ahmadabad
Unlike PF & ESI you do not deduct Gratuity from an employee's payroll. Yes, all employees who have completed 5 years' continuous service will have to be paid Gratuity at the time of their separation from the Co.
Vasant Nair
Director
Karma-HR
09717726667
From India, Mumbai
Vasant Nair
Director
Karma-HR
09717726667
From India, Mumbai
Dear Sir
please let me clear on following points.
1) gratuity may be secured / protected by any insurence company.
2) if any employee died within 6 month after joining how can we / co fascilitate with gratuity .
3) company will not provide as per gratuity act but how can we we pay with any coverage with any policy if any person die during out the course of employment.
From India
please let me clear on following points.
1) gratuity may be secured / protected by any insurence company.
2) if any employee died within 6 month after joining how can we / co fascilitate with gratuity .
3) company will not provide as per gratuity act but how can we we pay with any coverage with any policy if any person die during out the course of employment.
From India
Dear Nidhi,
Payment of Gratuity and CTC calculation are two different aspects altogether.
a) While the former one is statutory and all the eligible employees who leave the company has to be paid the gratuity as per the provision of the Payment of Gratuity Act and it is mandatory , any violation or non-compliance may lead to penalty or other action by concerned authority.
b) The company has to make provisions for the Gratuity in their books and disperse the amount as and when separation takes places.
c) The calculation is
Basic + DA + (Personal pay, if any) X 15 X N (no. of completed years)
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26
For calculation, separated person’s last drawn Salary components has to be
taken in to account as per the act
d)Nowadays company’s enter in to agreement with Insurance Agencies in their Gratuity Schemes.
With regard to CTC, it is purely an internal calculation for the purpose of arriving the manpower cost by the company and it is between the individual and the employer. Simply because the CTC component is shown in their CTC the employee can not claim in case he/she does not become eligible as per the Payment of Gratuity Act.
I hope the above clarifies your queries.
Thanks & Regards
Balamurugan Sivaprakasam
Head- HR
ICIL, MM Nagar
From India, Madras
Payment of Gratuity and CTC calculation are two different aspects altogether.
a) While the former one is statutory and all the eligible employees who leave the company has to be paid the gratuity as per the provision of the Payment of Gratuity Act and it is mandatory , any violation or non-compliance may lead to penalty or other action by concerned authority.
b) The company has to make provisions for the Gratuity in their books and disperse the amount as and when separation takes places.
c) The calculation is
Basic + DA + (Personal pay, if any) X 15 X N (no. of completed years)
------------------------------------------------------------------
26
For calculation, separated person’s last drawn Salary components has to be
taken in to account as per the act
d)Nowadays company’s enter in to agreement with Insurance Agencies in their Gratuity Schemes.
With regard to CTC, it is purely an internal calculation for the purpose of arriving the manpower cost by the company and it is between the individual and the employer. Simply because the CTC component is shown in their CTC the employee can not claim in case he/she does not become eligible as per the Payment of Gratuity Act.
I hope the above clarifies your queries.
Thanks & Regards
Balamurugan Sivaprakasam
Head- HR
ICIL, MM Nagar
From India, Madras
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FORM-F-NOMINATI ON OF GRATUITY.pdf
Gratuity Form I.doc