Our Co is facing this problem on gratuity. We have employees who resign onsite and have over 5 years of service at time for resignation.
While they are deputed onsite they are paid only local salary. This onsite local salary includes a component called the Indian Basic salary converted to local currency and an equivalent amount of 12% is deducted towards PF contributions. This is hiked year on year during which the Indian basic salary and also the PF proportionately changes
But while making gratuity payments, our organization is calculating the Basic salary as the last drawn basic salary while in India which could be quite different compared to the current basic Indian salary which is converted to local onsite currency and paid.
Is this correct as per gratuity policy act.
From India, Bangalore
While they are deputed onsite they are paid only local salary. This onsite local salary includes a component called the Indian Basic salary converted to local currency and an equivalent amount of 12% is deducted towards PF contributions. This is hiked year on year during which the Indian basic salary and also the PF proportionately changes
But while making gratuity payments, our organization is calculating the Basic salary as the last drawn basic salary while in India which could be quite different compared to the current basic Indian salary which is converted to local onsite currency and paid.
Is this correct as per gratuity policy act.
From India, Bangalore
Hi Aruna
As per Gratuity act Gratuity is calculated on the last drawn basic salary. As they are on site do you have any policy for payment of gratuity for On site employees?
If not you should prepare the same. As per my knowledge I believe that they can convert the value of Basic salary to INR and pay accordingly.
From India, Bangalore
604As per Gratuity act Gratuity is calculated on the last drawn basic salary. As they are on site do you have any policy for payment of gratuity for On site employees?
If not you should prepare the same. As per my knowledge I believe that they can convert the value of Basic salary to INR and pay accordingly.
From India, Bangalore
I am not a legal expert on this but the way I see it is that we basically have to consider 2 points:
1. Since the salary has a clearly defined Indian Basic Salary component while onsite, the last such basic salary should be considered
2. Does the law or any case in point define how to treat employees of Indian companies deputed abroad? My sense would be that since they have been employed by an Indian company and in India - deputation does not change the applicability of Gratuity Act in its true form.
Would love to see some expert advice on this
From India, Mumbai
1. Since the salary has a clearly defined Indian Basic Salary component while onsite, the last such basic salary should be considered
2. Does the law or any case in point define how to treat employees of Indian companies deputed abroad? My sense would be that since they have been employed by an Indian company and in India - deputation does not change the applicability of Gratuity Act in its true form.
Would love to see some expert advice on this
From India, Mumbai
You have to calculate gratuity based on local salary . VARGHESE MATHEW
From India, Thiruvananthapuram
From India, Thiruvananthapuram
I presume that onsite salary will be naturally more.You are paying PF contribution on the local salary ie; it is treated as basic.The same logic can be applied to gratuity also.There is an HR issue in this.An employee who has only few more months to complete 5 yrs and posted onsite will be in a more advantageous position than his counter part in India.
Varghese Mathew
From India, Thiruvananthapuram
Varghese Mathew
From India, Thiruvananthapuram
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Gratuity Eligibility.pdf
Gratuity eligibility for less than 5 yrs. (4yrs.240days). docx