We have an employee who is scheduled to retire on 30th June 2024. However, we intend to extend his services for an additional year. With a service tenure of 15 years, he is eligible for a Gratuity payment. Should we process and pay the gratuity now, or can we defer it to next year? If we choose to pay it next year, should we include the period of extended service in the gratuity calculation?
From Germany, Waldenburg
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From Germany, Waldenburg
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If you are not settling his gratuity now but keeping him for one more year, then the gratuity payable next year will be more because one more year will be added to his service.
At the same time, you can settle the gratuity now and keep him as an employee for an extended period of one or two years. When he retires then, he may not be entitled to any gratuity for the extended time. But if his extended time extends to another five years, then that period will earn him gratuity.
Similarly, if the law of gratuity is revised as per the new Labour Codes proposed within that period, he should be paid gratuity for that extended period even if that extended period does not account for five years. Therefore, it is always good if you pay the gratuity now and then offer employment as per a separate offer with different service conditions.
From India, Kannur
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4526At the same time, you can settle the gratuity now and keep him as an employee for an extended period of one or two years. When he retires then, he may not be entitled to any gratuity for the extended time. But if his extended time extends to another five years, then that period will earn him gratuity.
Similarly, if the law of gratuity is revised as per the new Labour Codes proposed within that period, he should be paid gratuity for that extended period even if that extended period does not account for five years. Therefore, it is always good if you pay the gratuity now and then offer employment as per a separate offer with different service conditions.
From India, Kannur
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Less than 5 years service - Eligibility for payment of gratuity.pdf
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