s_n_mohit
3

Somebody brought this up recently. Please let me know, if any of you
know details of the same.
"Gratuity cannot be treated as part of Cost to Company calculations" -
recent Supreme Court judgment
If any of you have a copy of judgment, please forward references, will
be obliged.
Thanks
mohit

From India, Ludhiana
Ajmal Mirza
35

I have not been able to find the judgement on the net... And am not sure if this kind of Judgement has been given [tried looking in the news section of major news paper as well]

By the way the brief of the Gratuity act is given below... And I think even if the Supreme Court gives a verdict, in actual practice the company will definately count it as the cost to the company as it is a statutory requirement and company actually spends money which can be attributed to the employee's personal welfare...

__________________________________________________ ______

Gratuity is a benefit mandated under the Payment of Gratuity Act,

1972 (The Gratuity Act) and the employer is under a statutory obligation

to pay gratuity to his employees under the stipulated conditions. However

the benefit is largely unregulated except for the provisions in the Income

Tax Act, 1961 (the IT Act) if the employer had set up an Gratuity Fund

approved by Income Tax Authorities.

The Gratuity Act is currently enforced by the Labor Commissioners of the

respective state governments. This leads to differential regulations. As per

the Section 4A of the Gratuity Act, each State can notify the clauses for

exemption from an insurance policy in their own way.

Gratuity is a retirement benefit and needs to be administered differently

than other Labor legislations like the Factories Act, Payment of Wages Act

etc.

Superannuation is a Voluntary Occupational Pension Scheme adopted by

employers. There is no legislation of regulatory body for these plans other

than the Income Tax Department.

The employers who wanted to fund and institutionalize either the Gratuity

or Superannuation scheme had two options. One was to approach the Life

Insurance Corporation of India (LIC), the state life insurance monopoly until

the other day, for a group insurance product and the second alternative was

to administer a trust with employee and employer trustees. While employer

run pension schemes can accumulate and invest funds, they are required to

purchase annuities on behalf of the retiring employees from LIC

From India, Ahmadabad
BT4310
Some companies, cut corners when giving an offer to a canditate by including gratuity amount in the break up of salary offered. [the analogy being that if the company spends, its your income and thus it is to be included in the CTC i.e. the package offered to the new employee].This is not only misleading but unethical too. I have my self a victim of the said practice. Gratuity is paid only upon leaving the company after at least 5 years in the employment. If one resignes, within five years, he gets nothing, and thus, the company has not paid him as promised in the break up of package offered at the time of joining the company.

If gratuity is included in the break up of package offered, then the company should pay the same to the employee irrespective of the employee completes 5 years or not otherwise it is a breach of contract. However, employees mutely accept this injustice because, one man cannot fight the corporate, besides, in the appointment letter, only basic salary is mentioned and the other components are "as per the rules of the company"

HR professionals should NOT indulge in these type of malpractices and injustices to the employees.

Bharat

From India, Mumbai
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