hi, can i know, what is gratuity law for a person whom yearly package is paid instead of monthly salary
From India, Delhi
From India, Delhi
You can not pay salary on a yearly basis because as per the Payment of Wages Act, no wage period should exceed more than one month.
You may offer salary on an yearly basis as it looks more attractive to say Rs 3.6 lakhs per annum as salary but you should pay it as Rs 30000 per month only.
Therefore, there is no question of calculation gratuity for a person who has been offered salary on an yearly basis. Calculate gratuity on his last month's salary.
Regards,
Madhu.T.K
From India, Kannur
4193You may offer salary on an yearly basis as it looks more attractive to say Rs 3.6 lakhs per annum as salary but you should pay it as Rs 30000 per month only.
Therefore, there is no question of calculation gratuity for a person who has been offered salary on an yearly basis. Calculate gratuity on his last month's salary.
Regards,
Madhu.T.K
From India, Kannur
Hi r v
As per the gratuity act, every employee who complete 5 years of service in a given organization is eligible to receive gratuity from his employer.
As Mr. Madhu T.K had said above the salary if called and paid to an employee on yearly basis, it has to be divided by 12 months to arrive at per month salary / wage. The Salary or Wage can not be paid on yearly basis, as said above the wage is to be paid on 30 days period as per the acts in force in india.
Hence the person to whom your employer is paying yearly salary is entitled for getting gratuity from his employer by taking above calculations i.e. yearly salary / 12 months = 1 months salary / 26 days = per day salary X 15 days per year of service X No of years he had served the organisation (No. of years should be more than 5 years period)= Total gratuity the person will receive..
Mohan Rao
Manager HR
From India, Visakhapatnam
As per the gratuity act, every employee who complete 5 years of service in a given organization is eligible to receive gratuity from his employer.
As Mr. Madhu T.K had said above the salary if called and paid to an employee on yearly basis, it has to be divided by 12 months to arrive at per month salary / wage. The Salary or Wage can not be paid on yearly basis, as said above the wage is to be paid on 30 days period as per the acts in force in india.
Hence the person to whom your employer is paying yearly salary is entitled for getting gratuity from his employer by taking above calculations i.e. yearly salary / 12 months = 1 months salary / 26 days = per day salary X 15 days per year of service X No of years he had served the organisation (No. of years should be more than 5 years period)= Total gratuity the person will receive..
Mohan Rao
Manager HR
From India, Visakhapatnam
Hi,
As you have mentioned gratuity is calculated on last drawn salary by employee, now considering last couple of yrs. salary is as per minimum wage act and previous to that (may be before 2-3 yrs back) if salary was less than minimum wage act, employee can demand difference amt. of all those yrs.?
Thanks.
From India, Mumbai
As you have mentioned gratuity is calculated on last drawn salary by employee, now considering last couple of yrs. salary is as per minimum wage act and previous to that (may be before 2-3 yrs back) if salary was less than minimum wage act, employee can demand difference amt. of all those yrs.?
Thanks.
From India, Mumbai
Hi all,
My question is different.
actually in our organization gratuity is included in salary package.
it is liable as per the law?
b'coz as per gratuity act one can eligible for gratuity after completion of five years only.
So, if some one left the organization before five years then he will loose his Gratuity amount which is included in salary package.
From India, Surat
My question is different.
actually in our organization gratuity is included in salary package.
it is liable as per the law?
b'coz as per gratuity act one can eligible for gratuity after completion of five years only.
So, if some one left the organization before five years then he will loose his Gratuity amount which is included in salary package.
From India, Surat
If gratuity is included in the salary and an amount is deducted every month from gratuity with a view to paying it when the employee leaves, the same is payable even if he is leaving before five years.
As per law, gratuity is an amount payable by the employer alone and the employer is not suppose to deduct it from employee. This is a practice developed by new generation HR by which all present and future costs which the employer is incurring due to employment of a person are included in the salary/ remuneration/ CTC of that person so that the amount offered will look very attractive. While accepting such offers itself you should make an understanding as to what will be your actual salary. Since the employer has not offered any "salary" but has shown only the "Cost To Company" by employing you, there is nothing wrong from the employer's side also. However, if gratuity is shown as a deduction from gross salary in your PAY SLIP (which is a legal document) then the things will change and the employer will be liable to refund such deduction when the employee demands for it or when he leaves the organisation. This is because the employer is not suppose to make any deduction which is not permitted in the Payment of Wages Act and deduction for gratuity is not a permissible deduction.
Regards,
Madhu.T.K
From India, Kannur
As per law, gratuity is an amount payable by the employer alone and the employer is not suppose to deduct it from employee. This is a practice developed by new generation HR by which all present and future costs which the employer is incurring due to employment of a person are included in the salary/ remuneration/ CTC of that person so that the amount offered will look very attractive. While accepting such offers itself you should make an understanding as to what will be your actual salary. Since the employer has not offered any "salary" but has shown only the "Cost To Company" by employing you, there is nothing wrong from the employer's side also. However, if gratuity is shown as a deduction from gross salary in your PAY SLIP (which is a legal document) then the things will change and the employer will be liable to refund such deduction when the employee demands for it or when he leaves the organisation. This is because the employer is not suppose to make any deduction which is not permitted in the Payment of Wages Act and deduction for gratuity is not a permissible deduction.
Regards,
Madhu.T.K
From India, Kannur
Dear sir,
Thank you very much.
Our employer is not mentioned gratuity amount in Pay Slip.
But as he count as a part of employee CTC so we can said that, it is one kind of deduction for an employee. which he will not get back (like Bonus, LTA or Medical) if he will not completed 5 years of employment.
So as per my belief it is not liable for employee side.If they count gartuity as a part of CTC , then they should paid gratuity even if employee will not complete 5 years of employment.
From India, Surat
Thank you very much.
Our employer is not mentioned gratuity amount in Pay Slip.
But as he count as a part of employee CTC so we can said that, it is one kind of deduction for an employee. which he will not get back (like Bonus, LTA or Medical) if he will not completed 5 years of employment.
So as per my belief it is not liable for employee side.If they count gartuity as a part of CTC , then they should paid gratuity even if employee will not complete 5 years of employment.
From India, Surat
Hi all
Mr. Madhu T.K. has explained clearly.
The Employer hold no right for deduction of gratuity from employee salary / wage. If he deduct he is doing illegal activities. CTC is a sum only for the sake of showing how do a company pay to an individual employee and what would be the wage load for a company for a given financial year.
For example the employer share of PF, ESI, are also a part of CTC do you mean the employer deduct the employer share of above elements from the employee salary / wage, no he does not, hence so with gratuity.
Mohan Rao
Manager HR
From India, Visakhapatnam
Mr. Madhu T.K. has explained clearly.
The Employer hold no right for deduction of gratuity from employee salary / wage. If he deduct he is doing illegal activities. CTC is a sum only for the sake of showing how do a company pay to an individual employee and what would be the wage load for a company for a given financial year.
For example the employer share of PF, ESI, are also a part of CTC do you mean the employer deduct the employer share of above elements from the employee salary / wage, no he does not, hence so with gratuity.
Mohan Rao
Manager HR
From India, Visakhapatnam
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FORM-F-NOMINATI ON OF GRATUITY.pdf
Gratuity Form I.doc