Our company has taken a Group Gratuity Policy from LIC and is paying gratuity based on the gross salary. The premium was calculated and paid to LIC on the gross salary as well. However, during the full & final settlement, the gratuity was calculated and paid based on the basic salary.
We are wondering how we can claim the remaining balance of the gratuity amount, and who should we reach out to as the competent authority in such cases.
From India, Noida
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We are wondering how we can claim the remaining balance of the gratuity amount, and who should we reach out to as the competent authority in such cases.
From India, Noida
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The perceived problem is LIC premium. Send a letter and ask your specific query of premium charged on gross salary. Give some examples. If you are right, you can claim the difference with retrospective effect. But statutory gratuity is payable on basic (and DA) only.
From India, Mumbai
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274From India, Mumbai
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Dear Sumit Barua,
Understanding Group Gratuity Policy
Group Gratuity Policy is, in fact, a contract of insurance only between the Insurer, namely LIC, and the employer, even though the beneficiary is the employee covered by the policy. Therefore, the employee can demand the maximum sum of gratuity only as per the Payment of Gratuity Act, 1972, and not the maturity value of the insurance plan. If gratuity is not paid in accordance with the provisions of the PG Act or is delayed, the employee can proceed against both the employer and the Insurer. The insurer's liability is limited to the premium paid by the employer.
Components of Salary for Gratuity Calculation
If your salary structure comprises different components such as basic, dearness allowance, and other allowances, only the sum total of the last drawn basic and D.A. alone would be considered for the computation of your gratuity as per the Act upon termination of employment. This calculation is not based on the premium paid. If the dearness allowance component is absent in the wage structure, only the basic is to be taken into account. In the case where it is consolidated, the entire sum must be considered.
Filing a Claim for Gratuity
If the amount of gratuity paid by the employer through LIC is less than the amount stipulated by the Act, you have the right to file a claim under Section 7 of the Act with the Controlling Authority designated in the Act.
From India, Salem
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Understanding Group Gratuity Policy
Group Gratuity Policy is, in fact, a contract of insurance only between the Insurer, namely LIC, and the employer, even though the beneficiary is the employee covered by the policy. Therefore, the employee can demand the maximum sum of gratuity only as per the Payment of Gratuity Act, 1972, and not the maturity value of the insurance plan. If gratuity is not paid in accordance with the provisions of the PG Act or is delayed, the employee can proceed against both the employer and the Insurer. The insurer's liability is limited to the premium paid by the employer.
Components of Salary for Gratuity Calculation
If your salary structure comprises different components such as basic, dearness allowance, and other allowances, only the sum total of the last drawn basic and D.A. alone would be considered for the computation of your gratuity as per the Act upon termination of employment. This calculation is not based on the premium paid. If the dearness allowance component is absent in the wage structure, only the basic is to be taken into account. In the case where it is consolidated, the entire sum must be considered.
Filing a Claim for Gratuity
If the amount of gratuity paid by the employer through LIC is less than the amount stipulated by the Act, you have the right to file a claim under Section 7 of the Act with the Controlling Authority designated in the Act.
From India, Salem
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You should have paid premium calculated on the basis of basic and DA only.
From India, Thiruvananthapuram
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From India, Thiruvananthapuram
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Dear Sumit, Greetings for the day, Calculation of Gratuity is done on basic salary+da and formula should be ; current basic+da/26 * 15* year of service. Thanks & Regards, from, sumit kumar saxena
From India, Ghaziabad
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From India, Ghaziabad
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Clarification on LIC Premium Calculation
There is a point in the statement of Shri Varghese Mathew that we should pay the LIC premium based on Basic & DA only, and not on the Gross salary. Since LIC is paying the Gratuity Benefit only on Basic & DA, companies can calculate the premium payable on Basic & DA instead of the Gross salary, as is currently done by some companies. Actually, the company is paying more to LIC as a premium, and there is no corresponding benefit to employees. Can we request LIC to clarify the matter?
Regards
From India, Bangalore
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There is a point in the statement of Shri Varghese Mathew that we should pay the LIC premium based on Basic & DA only, and not on the Gross salary. Since LIC is paying the Gratuity Benefit only on Basic & DA, companies can calculate the premium payable on Basic & DA instead of the Gross salary, as is currently done by some companies. Actually, the company is paying more to LIC as a premium, and there is no corresponding benefit to employees. Can we request LIC to clarify the matter?
Regards
From India, Bangalore
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