Gratuity payment

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

02 December 2009 Hi, I am employed with a company with less than 10 employees. The company claims to cut an amount from my salary for gratuity. We, however, do not get PF. I was wondering if there are any rules and regulations governing this, as it appears that the company is just trying to keep the payments with themselves, since they know none of the current employees will be with them for 5 years. Also, are they required to keep some documentation for the gratuity accounts?

Rasesh

Rasesh (Expert)
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02 December 2009 The Company can either be making a provision in their books of accounts at the end of the year for gratuity and showing it as a provision in the balance sheet. If it is doing so, it is legally valid.

If not so, the company is required to create a fund with an institution who is authorised to manage grauity accounts. Example: LIC, ICICI etc and make a contribution to the fund at the end of the year.

If the company is not doing any of the above, then it is cheating the employees.