Hello Seniors/Legal Pandits,
could you pls help me out how the companies are managing this.
1. As someone said is it illegal?
2. if it is illegal how the companies are managing?
3. Is there any loop in the law?
Let us put a light on this so that it will be useful for all of us.
Myself, i feel it is ok in CTC concept.
Regards,
Rajendra :)
From India, Warangal
15could you pls help me out how the companies are managing this.
1. As someone said is it illegal?
2. if it is illegal how the companies are managing?
3. Is there any loop in the law?
Let us put a light on this so that it will be useful for all of us.
Myself, i feel it is ok in CTC concept.
Regards,
Rajendra :)
From India, Warangal
Dear Mr. Rajendra,
Payment of Gratuity Act is applicable to most of the companies and they have to pay gratuity as applicable.
Concept and definition of Gratuity is very clear and it is entirely borne by employer. There is no provision of employee contribution, as in the case of PF.
I have not come across any company so far who collects contribution from employees towards gratuity. In case any company is doing so, it is illegal. There is no loophole in law.
As companies grow and number of employees and their length of services increases, employer’s liability towards gratuity also keeps increasing. To make provision for the gratuity liability some companies form a ‘gratuity trust’ and set aside amounts in trust. LIC and other insurance companies also offer a product wherein they charge annual premium based on the actuarial calculation of gratuity liability. In any case trust or insurance, it is entirely funded by employer alone.
Some companies include gratuity in CTC and nothing wrong if it is included in CTC.
Thanks & Regards
From India, Pune
Payment of Gratuity Act is applicable to most of the companies and they have to pay gratuity as applicable.
Concept and definition of Gratuity is very clear and it is entirely borne by employer. There is no provision of employee contribution, as in the case of PF.
I have not come across any company so far who collects contribution from employees towards gratuity. In case any company is doing so, it is illegal. There is no loophole in law.
As companies grow and number of employees and their length of services increases, employer’s liability towards gratuity also keeps increasing. To make provision for the gratuity liability some companies form a ‘gratuity trust’ and set aside amounts in trust. LIC and other insurance companies also offer a product wherein they charge annual premium based on the actuarial calculation of gratuity liability. In any case trust or insurance, it is entirely funded by employer alone.
Some companies include gratuity in CTC and nothing wrong if it is included in CTC.
Thanks & Regards
From India, Pune
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SBT Vs Asst. Labour Commissioner- Gratuity dismissed employee-LTS.PD F
FORM I(Application for Gratuity by an employee).doc