Dear Seniors,
We are a Pvt Ltd company started in March 2010. Currently, our employee strength is around 70, across various locations in India. Our internal auditors who visited us recently have indicated that we are not adhering to the regulations of the Gratuity Act.
Procedure for Compliance with the Gratuity Act
I am aware that we have to follow the below-mentioned procedure:
1. Submit Form A to the concerned authority.
2. Open a trust for gratuity, with an SB account for the trust.
3. Link the trust with LIC schemes (Optional).
We are planning to credit this SB account/LIC on a monthly basis with the calculated value. Upon the employee becoming eligible, we would pay from this SB account/LIC. Kindly correct me if our plan is wrong.
Query on Employee Departure Before 5 Years
My doubt is, if an employee leaves the organization before the completion of 5 years, can the amount accumulated in the SB account/LIC on behalf of that individual be credited back to the company account?
If not, how can we proceed to avoid unnecessary blocking of the company's funds?
Your inputs would be of great value to us. Kindly clarify. Thanks in advance.
Regards
From India, Madras
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We are a Pvt Ltd company started in March 2010. Currently, our employee strength is around 70, across various locations in India. Our internal auditors who visited us recently have indicated that we are not adhering to the regulations of the Gratuity Act.
Procedure for Compliance with the Gratuity Act
I am aware that we have to follow the below-mentioned procedure:
1. Submit Form A to the concerned authority.
2. Open a trust for gratuity, with an SB account for the trust.
3. Link the trust with LIC schemes (Optional).
We are planning to credit this SB account/LIC on a monthly basis with the calculated value. Upon the employee becoming eligible, we would pay from this SB account/LIC. Kindly correct me if our plan is wrong.
Query on Employee Departure Before 5 Years
My doubt is, if an employee leaves the organization before the completion of 5 years, can the amount accumulated in the SB account/LIC on behalf of that individual be credited back to the company account?
If not, how can we proceed to avoid unnecessary blocking of the company's funds?
Your inputs would be of great value to us. Kindly clarify. Thanks in advance.
Regards
From India, Madras
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Clarification on LIC's Role in Gratuity Management
Each year, the authorities of LIC will call for data of employees on which the premium is to be calculated for the gratuity trust. In response to your question, it is clarified that LIC only manages the fund. LIC will release the gratuity to the trust, and the trust will release it to the concerned employee. It is entirely up to the management to ensure that gratuity is paid as per the provisions of the Gratuity Act.
From India, Gurgaon
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1Each year, the authorities of LIC will call for data of employees on which the premium is to be calculated for the gratuity trust. In response to your question, it is clarified that LIC only manages the fund. LIC will release the gratuity to the trust, and the trust will release it to the concerned employee. It is entirely up to the management to ensure that gratuity is paid as per the provisions of the Gratuity Act.
From India, Gurgaon
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