I have seen that some private organizations show gratuity deduction on the salary slip even at the start of new employment. Is this correct? If a company is not displaying the deduction on the salary slip and is not registered, can an employee still claim the gratuity amount? Please clarify.
From India, Pune
Acknowledge(0)
Amend(0)
7From India, Pune
Acknowledge(0)Amend(0)
Hello Anonymous,
I am in total agreement with the reply of Sh. Sudinair. He has, in a nutshell, mentioned the provisions existing under the Payment of Gratuity Act. More elaborately, the conditions for the eligibility of gratuity are explained below:
1. Section 3(b) of the Act mentions that every shop or establishment in which ten or more persons are employed or were employed during the preceding twelve months.
2. As per PG (Central) Rule 3, an employer shall submit a notice in Form A to the controlling authority of the area within thirty days of the rules becoming applicable to an establishment.
3. Section 4 of the Act clearly stipulates that gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years: (a) on his superannuation, or (b) on his retirement or resignation, or (c) on his death or disablement due to accident or disease. It is provided further that the completion of continuous service of five years shall not be necessary where the termination of the employment of any employee is due to death or disablement.
Some of our members have opined that the gratuity shall not be payable if there is no mention of the same in their CTC. However, I am of the strong opinion that since it is a STATUTORY DUE, the employer is duty-bound to pay the gratuity to the eligible employees irrespective of whether the component of gratuity has been included in the CTC or not and whether a notice in Form A to the controlling authority of the area has been submitted or not.
BS Kalsi
Member since Aug 2011
From India, Mumbai
Acknowledge(0)Amend(0)
I am in total agreement with the reply of Sh. Sudinair. He has, in a nutshell, mentioned the provisions existing under the Payment of Gratuity Act. More elaborately, the conditions for the eligibility of gratuity are explained below:
1. Section 3(b) of the Act mentions that every shop or establishment in which ten or more persons are employed or were employed during the preceding twelve months.
2. As per PG (Central) Rule 3, an employer shall submit a notice in Form A to the controlling authority of the area within thirty days of the rules becoming applicable to an establishment.
3. Section 4 of the Act clearly stipulates that gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years: (a) on his superannuation, or (b) on his retirement or resignation, or (c) on his death or disablement due to accident or disease. It is provided further that the completion of continuous service of five years shall not be necessary where the termination of the employment of any employee is due to death or disablement.
Some of our members have opined that the gratuity shall not be payable if there is no mention of the same in their CTC. However, I am of the strong opinion that since it is a STATUTORY DUE, the employer is duty-bound to pay the gratuity to the eligible employees irrespective of whether the component of gratuity has been included in the CTC or not and whether a notice in Form A to the controlling authority of the area has been submitted or not.
BS Kalsi
Member since Aug 2011
From India, Mumbai
Acknowledge(0)Amend(0)
Dear All,
Thank you for your valuable insight. Now, from where I see the case, the company is liable to pay gratuity as per the Payment of Gratuity Act 1972. No deduction shall be made on the part of the employee's salary when it comes to gratuity. However, for PF emoluments, a lump sum of 12% is deducted, and a similar 12% is contributed by the employer.
There are a few requirements on the part of the employee for claiming gratuity:
1. He should have worked for not less than five years for the employer.
The gratuity is calculated as follows: (Basic + DA) / 26 X 15 X Number of Years Worked.
Regarding the coverage of the act for your company, if 10 or more persons have been employed in any day of the preceding 12 months, then yes, gratuity is applicable.
As for the current amendments:
Gratuity up to INR 10,00,000 is tax-free, and the maximum gratuity payable should not exceed a total of 20 months' wages.
I hope your query is cleared to some extent. And please, other members, if I am wrong anywhere, please do correct me. I am always open to learning.
For people with doubts related to anything in the HR fraternity, you can contact me on my LinkedIn profile Arakanshu Singh - India | LinkedIn or email me at akkyinmba@gmail.com.
From Singapore, Singapore
Acknowledge(0)Amend(0)
Thank you for your valuable insight. Now, from where I see the case, the company is liable to pay gratuity as per the Payment of Gratuity Act 1972. No deduction shall be made on the part of the employee's salary when it comes to gratuity. However, for PF emoluments, a lump sum of 12% is deducted, and a similar 12% is contributed by the employer.
There are a few requirements on the part of the employee for claiming gratuity:
1. He should have worked for not less than five years for the employer.
The gratuity is calculated as follows: (Basic + DA) / 26 X 15 X Number of Years Worked.
Regarding the coverage of the act for your company, if 10 or more persons have been employed in any day of the preceding 12 months, then yes, gratuity is applicable.
As for the current amendments:
Gratuity up to INR 10,00,000 is tax-free, and the maximum gratuity payable should not exceed a total of 20 months' wages.
I hope your query is cleared to some extent. And please, other members, if I am wrong anywhere, please do correct me. I am always open to learning.
For people with doubts related to anything in the HR fraternity, you can contact me on my LinkedIn profile Arakanshu Singh - India | LinkedIn or email me at akkyinmba@gmail.com.
From Singapore, Singapore
Acknowledge(0)Amend(0)
Hi Your employer is liable to pay gratuity. The employer should have planned and deposited/invested this amount as gratuity fund with any nationalized bank/LIC /bondetc. thanks Gangadharan
From India, Mumbai
Acknowledge(0)Amend(0)
From India, Mumbai
Acknowledge(0)Amend(0)
Hi All,
I have joined an IT company as a trainee and worked for the initial 6 months as a trainee. I joined the company on 26th Aug 2008, so 5 years on 26th Aug 2013. Does that 6-month period count towards the completion of 5 years to be applicable for gratuity? Or do I have to complete an additional 5 years beyond those 6 months of the training period?
Thanks.
From India, Chandigarh
Acknowledge(0)Amend(0)
I have joined an IT company as a trainee and worked for the initial 6 months as a trainee. I joined the company on 26th Aug 2008, so 5 years on 26th Aug 2013. Does that 6-month period count towards the completion of 5 years to be applicable for gratuity? Or do I have to complete an additional 5 years beyond those 6 months of the training period?
Thanks.
From India, Chandigarh
Acknowledge(0)Amend(0)
Dear Ankit,
You need to check the terms & conditions of your appointment letter. Please also check the following points:
(i) Whether the training period was an integral part of your present position?
(ii) Whether there was any break between your training period and regular position/post?
If your training period was an integral part of your service and you continued in the regular service thereafter without any break, then the period of six months shall be counted for the purpose of calculation of payment gratuity payable to you. But if there was any break between your training period and regular service, then the period of six months shall not be counted.
BS Kalsi
Member since Aug 2011
From India, Mumbai
Acknowledge(0)Amend(0)
You need to check the terms & conditions of your appointment letter. Please also check the following points:
(i) Whether the training period was an integral part of your present position?
(ii) Whether there was any break between your training period and regular position/post?
If your training period was an integral part of your service and you continued in the regular service thereafter without any break, then the period of six months shall be counted for the purpose of calculation of payment gratuity payable to you. But if there was any break between your training period and regular service, then the period of six months shall not be counted.
BS Kalsi
Member since Aug 2011
From India, Mumbai
Acknowledge(0)Amend(0)Looking for something specific? - Join & Be Part Of Our Community and get connected with the right people who can help. Our AI-powered platform provides real-time fact-checking, peer-reviewed insights, and a vast historical knowledge base to support your search.
Gratuity Act-Teachers-Ma dhya Pradesh.docx