Many companies are now including gratuity in the CTC (Cost to Company) package. This leads to a question: if it’s part of CTC, shouldn’t employees receive it with their final settlement even if they leave before completing the standard 5 years of service, as per the Gratuity Act? How do companies justify holding back gratuity if it’s considered part of the overall salary package?

Apni Law
Apni Law
Law Forum › Category: Labour & Service › Many companies are now including gratuity in the CTC (Cost to Company) package. This leads to a question: if it’s part of CTC, shouldn’t employees receive it with their final settlement even if they leave before completing the standard 5 years of service, as per the Gratuity Act? How do companies justify holding back gratuity if it’s considered part of the overall salary package?
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Apni Law Staff asked 2 years ago

Many companies are now including gratuity in the CTC (Cost to Company) package. This leads to a question: if it’s part of CTC, shouldn’t employees receive it with their final settlement even if they leave before completing the standard 5 years of service, as per the Gratuity Act? How do companies justify holding back gratuity if it’s considered part of the overall salary package?

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Apni Law Staff answered 2 years ago

Under Indian law, gratuity is payable only after completing five years of continuous service. Even if included in CTC, companies are not obligated to pay gratuity for employees leaving before completing this period. Companies justify this by stating that gratuity is a benefit earned over time and not a part of the regular salary.

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