Referring to the comment "Though an employee can receive the gratuity amount only after 5 years, some employers add that in their CTC every year, i.e., if an employee leaves before 5 years, then it will remain only in papers."
Is it legally permitted?
Should the organization not pay the amount if the same has been deducted as part of CTC irrespective of completing the tenure of 5 years?
From India, Imphal
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Is it legally permitted?
Should the organization not pay the amount if the same has been deducted as part of CTC irrespective of completing the tenure of 5 years?
From India, Imphal
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Hi, this topic has been previously discussed.
Gratuity Premium Deduction
Any amount deducted towards the gratuity premium within the gross salary should be paid by the employer irrespective of the tenure completed by the employee. However, any component out of the gross salary that forms part of the CTC salary is not obligatory for the employer to pay if the date of exit is before completing 5 years.
From India, Madras
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1015Gratuity Premium Deduction
Any amount deducted towards the gratuity premium within the gross salary should be paid by the employer irrespective of the tenure completed by the employee. However, any component out of the gross salary that forms part of the CTC salary is not obligatory for the employer to pay if the date of exit is before completing 5 years.
From India, Madras
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Can you see the gratuity amount being deducted from your salary? Is it shown somewhere in the salary slip?
Understanding CTC and Gratuity
CTC is not salary, but it is the sum of the costs that the employer (Company) shall incur by employing you. This shall include statutory payments that the employer is bound to pay you as part of giving permission to do business. Therefore, it has no legal sanctity. Moreover, good companies do not show the gratuity amount without a qualifying sentence like, "payable depending upon conditions as laid down in the law in force/ Payment of Gratuity Act."
From India, Kannur
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Understanding CTC and Gratuity
CTC is not salary, but it is the sum of the costs that the employer (Company) shall incur by employing you. This shall include statutory payments that the employer is bound to pay you as part of giving permission to do business. Therefore, it has no legal sanctity. Moreover, good companies do not show the gratuity amount without a qualifying sentence like, "payable depending upon conditions as laid down in the law in force/ Payment of Gratuity Act."
From India, Kannur
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@Vmlakshminarayanan @Madhu.T.K, thanks a lot for your valuable inputs; much appreciated.
@Madhu.T.K - The deduction is not mentioned in the salary slip; however, the appointment letter with the CTC structure mentions the gratuity deduction. It is deducted accordingly. The appointment letter also states that gratuity will be paid "in accordance with the Gratuity Payment Act 1972."
From India, Imphal
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@Madhu.T.K - The deduction is not mentioned in the salary slip; however, the appointment letter with the CTC structure mentions the gratuity deduction. It is deducted accordingly. The appointment letter also states that gratuity will be paid "in accordance with the Gratuity Payment Act 1972."
From India, Imphal
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Payment of Gratuity as per the Act
When the appointment letter states that gratuity will be paid as per the Payment of Gratuity Act, it will be paid in accordance with the law. Every year, the employer is obligated to set aside a certain amount for gratuity, which is determined after an actuarial valuation following accounting standards.
Gratuity in Case of Death
In cases of death, the requirement of five years of service is waived, and the employer must provide gratuity if something happens to the employee.
Forfeiture of Gratuity
Conversely, gratuity may be forfeited by an employee who qualifies for it in certain situations, depending on specific conditions.
From India, Kannur
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When the appointment letter states that gratuity will be paid as per the Payment of Gratuity Act, it will be paid in accordance with the law. Every year, the employer is obligated to set aside a certain amount for gratuity, which is determined after an actuarial valuation following accounting standards.
Gratuity in Case of Death
In cases of death, the requirement of five years of service is waived, and the employer must provide gratuity if something happens to the employee.
Forfeiture of Gratuity
Conversely, gratuity may be forfeited by an employee who qualifies for it in certain situations, depending on specific conditions.
From India, Kannur
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Hi, Some companies calculate gratuity as part of the CTC (i.e., 4.81% of the basic salary per year) and pay it only when the employee leaves the company, irrespective of their tenure. In that event, they very clearly mention it in the appointment and salary structure sheet accordingly. If gratuity is not part of the CTC and an employee is entitled to it after the completion of 5 years, it must be clearly mentioned in the appointment letter. After 5 years, the cost of the employee to the company increases.
Standard formula for gratuity
The standard formula for gratuity is (15 * your last drawn salary * the working tenure) when an employee leaves the company and is paid on their settlement.
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Standard formula for gratuity
The standard formula for gratuity is (15 * your last drawn salary * the working tenure) when an employee leaves the company and is paid on their settlement.
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Payment of Gratuity Act, 1972 & The Rules.ppt
THE PAYMENT OF GRATUITY ACT 1972.doc