Calculation of gratuity of director

Dear Friends,

Please provide me citation & Calculation for the following issue:

There was an employee worked for salary for Eleven years. He was further appointed as Whole time Director[WTD] for 6 years. This was duly informed to ROC and the same is recorded with ROC. Since he was made as Director he was being paid Director's consolidated remuneration (hence no Basic or DA) as per Board resolutions and every year depending upon the profit he was given increase in his fee also. The Board resolutios clearly spell out that he was being paid Directors remuneration.

After his resignation he is claiming gartuity from the Company.

Please clarify :
1.How to calculate his gratuity when their is no basic & DA as he was paid consolidated remuneration.
2.Should we calculate gratuity on whole consolidated amount.
3.If I refer the below statement :
where the WTD has completes his tenure of 5 years and is paid gratuity for the period. He is reappointed for another 5 years, but resigns before completion of tenure of another 5 years after reappointment. In such case he will loose gratuity for his second term.
If the above is true then we have not paid any gratuity. Then how it should be calculated now.

Please Reply as soon as possible

Thanks,

Ritika
 

 
Replies (1)

In the absence of bifurcation of  salary into basic pay and  allowances, gratuity will have to be calculated on consolidated salary.  Gratuity is payable on termination of employment.  There has to be some gap between termination of first term and starting of second term.  If he is  reappointed on the same day when his first term expires, there is no termination of employment and the question of gratuity does not arise.  If there is some  gap, then appointment has to be made afresh and eligility period for gratuity will start from that date.

 

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