biswajit mukherjee (Manager)     18 September 2013

# Computation of gratuity

Dear Sir,

I worked for an Indian Pvt Ltd company from 01 Oct 2001 to 30 Apr 2012 (total 10 yrs 7 months). In my last contract issued in Jan 2011, item (g) of Sl No. 4 states that

"Mr Biswajit Mukherjee shall continue to contribute to the company's
Provident Fund. The Provident Fund shall continue to be govemed in
accordance with the rules of the Company and "Employees provident Fund
and Miscellaneous Provisions Act, 1952", and the company will contribute
@12% of his deemed basic calculated as 60% of salary".

Otherwise, in the contract there is no mention about any basic pay item. The gross pay comprised:
1) Salary,
2) House Rent,
4) Variable Allowance.

My Salary was Rs.49250/- p.m., however, the PF deduction remained Rs.780/- pm during the entire tenure. It may be noted that, as per the contract, the basic should be 60% of Rs.49250 = Rs.29550/- and PF should be 12% of 29550/- = Rs.3546/-.

Last year I received a Gratuity of Rs.1,37,077/- and a PF of Rs.2,15,300/-.

As per my Computation:
Gratuity = 49,250*(15/26)*11=3,12,548/- (based on salary)
or at least,
Gratuity = 29,550*(15/26)*11=1,87,528/- (based on basic as 60% of salary)

I don't know the computation of PF. I don't know what percent of PF contributed by company goes to family pension. But, there is a possibility that the company also contributed Rs 780/- pm (as this amount was deducted) in place of Rs. 3546/- pm

When I requested the company for clarification, I was told that the computation was based on some (hidden) basic. I am wondering if the computation of gratuity should be on the basis of monthly salary when it is explicitly mentioned in the contract.

Last month I requested EPFO, kolkata for a clarification by writing a letter like this one, and received the following answer which I don't understand:

"This is with reference to your Grievance registered vide Registration Number ROKKT/E/2013/01595.
It is informed that after processing your grievance,the following action(s) has been taken:
While going through the grievance details it transpires that the Provident Fund has been deducted on Rs. 6500/- , i.e. the threshold compulsory limit under the EPF & MP Act, 1952. Contribution over and above 6500/- is not compulsory but may be with joint consent with the Employer.

I will appreciate if you would please let me know what it should be as per the law and also advise me what should I do if I was paid less.

Thanks and Regards,
Biswajit Mukherjee

Kumar Doab (FIN)     18 September 2013

Approach a competent and experience labor consultant/service lawyer as ap.

The lawyer that has seen all of your docs on record can advice you the best.

-----------PF: Your company has chosen to deduct PF on the threshold compulsory limit as stated by EPFO. It appears that you did not have any agreement and consent with employer on contribution of PF on entire Basic +DA………………

If you have some evidence you may succeed to agitate. The employer should have been issuing salary slip every month showing PF deduction to you and PF a/c slip received from EPFO showing employer’s, employee’s contribution, interest accrued and total balance in PF a/c,  for each year during your employment.

-------Gratuity: Entire amount shown against 1) Salary should qualify for the payment of Gartuity.

Thus your calculation of Gratuity = 49,250*(15/26)*11=3,12,548/- (based on salary) seems to be right.

Did the employer supply any notice to you with a copy to Controlling Authority of Gratuity on calculation of Gratuity payable to you. If NO it is a lapse at the end of employer…………………….

### Section: 7 Determination of the amount of gratuity.

If company has delayed and erred in the payment it has pay the interest as stipulated in the statue which was @ 10% from date of eligibility (DOL) ................................You may confirm the latest rate.

You may also demand the copy of the payment certificate issued by LIC to company.

IT IS BEING SUGGESTED IN ALMOST ALL THREADS THAT EMPLOYEE SHOULD STOP DEALING WITH EMPLOYER VERBALLY::::: COME OUT OF ASKING, SAYING, TELLING MODE::::: AND TRANSACT IN WRITING BY LETTER THRU REDG. POST.THE COMPNAY CAN NOT KEEP ANY AMOUNT FROM PAYMENT DISBURSED BY LIC TO COMPANY FROM GRATUITY ACCOUNT OF EMPLOYEE. COMPNAY HAS TO PAY ENTIRE AMOUNT TO EMPLOYEE IT HAS RECEIVED FROM LIC, EVEN IF AMOUNT OF GARTUITY  CALCULATED BY EMPLOYER BY FORMULAE OF GRATUITY IS LESS THAN AMOUNTS EMPLOYER HAS RECEIVED FROM LIC.

IN OTHER SITUATION LET US ASSUME THAT AMOUNT PAID BY LIC TO COMPNAY IS LESS THAN AMOUNT OF GRATUITY CALCULATED BY EMPLOYER BY FORMULAE FOR CALCULATION OF GRATUITY, STILL EMPLOYER HAS TO PAY HIGHER AMOUNT CALCULATED BY FORMULAE FOR CALCULATION OF GRATUITY………….

elaborated well by Mr Kumar Doab.

DO you think that less PF has been deducted /deposited.

Kumar Doab (FIN)     18 September 2013

PF: Revert to the advice of Mr. Sudhir Kumar.

Gratuity: You have received the payment last year. Did you submit any communication on record contesting the amount paid to you? If you have submitted letters say by normal post, submit subsequent communication by redg. post drawing attention to previous ones and demand payment of correct amounts. Conclude that calculation of company has been erratic and wrong.

Act fast, approach your lawyer and proceed further.

The payment of Gratuity Act is social security enactment and employers should take stance favorable to employee. Courts have taken stance favorable to employee.

biswajit mukherjee (Manager)     18 September 2013

Dear Mr Doab,

Thanks a lot for spending your valuable time on reading and responding to my queries.

I have not received any document showing computation of PF and Gratuity from the company. Soon after receiving the payment for Gratuity (the amount was electronically transferred to my bank) I emailed the concerned person (with a copy to the top management) requesting him to review the computation. I didn't get a reply via email. However, when contacted over telephone I was told that it was computed based on some (hidden) basic, excluding overhead of the company from the salary. Last week I have once again requested the company (via email) to send me payment certificate for PF and Gratuity along with computation details.

Since the monthly deduction for PF was less than that stated in the contract,  I presume that contribution of the company was also less.

As you suggested I need a competent lawyer specialized in this field. Please suggest someone practicing here in Kolkata.

Regards,

Biswajit Mukherjee

Kumar Doab (FIN)     19 September 2013

Did you receive salary slips showing PF deduction, PF a/c slips from employer every year during entire period of service?

You may think about the strategy on how to counter it.

You have posted that:

--------“I was told that the computation was based on some (hidden) basic.”

The entire salary at 1) should become Basic.

There is nothing like hidden in law. The 60% or whatever is taken for deciding the CTC and/or i.T calculations etc.

There are judgments by courts of law that allowances be included for deciding PF contributions.

-------PF: Mr. Sudhir Kumar is being requested to give his valuable advice and you may follow the same.

Few observations from your post are:

“Since the monthly deduction for PF was less than that stated in the contract”

It is felt that you can cite to good offices the concerned clause of the contract and declare that despite many reminders in writing, in person (while in employment……………………and later) on phone by email by letter the calculation/computation sheet is not supplied by company you are constrained to believe that Mr/Ms………………….designation……………..dept………….Name of company and address……………………. Have willfully and intentionally made wrong calculations and have caused you loss and are not inclined to undo the wrongdoings……………………you shall be constrained to take up the matter with lawful authority and courts of law.

The concerned authorized person in the company should have replied to your representations in writing.

It is believed that PF a/c is with EPFO, and company did not have its approved trust to manage the PF. However you may confirm it.

EPFO has replied as per reply it has received from company. It is felt that you had not supplied the copy of the contract along with your complaint. Hence EPFO did not refer to the concerned clause of the contract, while writing to the employer.

If the a/c is maintained with EPFO then the credit should have been received in a/c from EPFO and calculation sheet should have been supplied by EPFO to member and bank.

You may obtain the copy from EPFO.

You may go thru Citizens’ Charter.

--------Gratuity;

The concerned authorized person in the company should have replied to your representations in writing, and should have advised employer to adhere to the provision of the Act and observe lawful liabilities of the establishments. He and employer are liable for sincere and faithful observation of the provisions of the enactments.

It is believed that company did not have its approved trust to manage the Gratuity. However you may confirm it. If yes you may download the Gratuity Rules.

### Section: 9: Penalties:

{ You may lay emphasis on word “WHOEVER”}

(1) Whoever, for the purpose of avoiding any payment to be made by himself under this Act or of enabling any other person to avoid such payment, knowingly makes or causes to be made any false statement or false representation shall be punishable with imprisonment for a term which may extend to six months, or with fine which may extend to ten thousand rupees or with both.

(2) An employer who contravenes, or makes default in complying with, any of the provisions of this Act or any rule or order made there under shall be punishable with imprisonment for a term which shall not be less than three months but which may extend to one year, or with fine which shall not be less than ten thousand rupees but which may extend to twenty thousand rupees, or with both:

You may also go thru Section: 8: Recovery of gratuity.

Section: 7A: Inspectors

Section: 7B:Powers of Inspectors.

You can approach Inspector under this Act and/or Controlling Authority…………..

Regret does not know and can not suggest a Lawyer at Kolkota.

If you wish to avail the services of LCI lawyer you can conduct search at:

The LCI has published the list of related lawyers on the bottom of this web page.

You can chat and access Pro Lawyers of LCI.

Your near and dear ones can also recommend lawyer/law firm to you.

The lawyer that has seen all of your docs on record can advice you the best.

DO you think that less PF has been deducted /deposited.

biswajit mukherjee (Manager)     22 September 2013

I have tried to compute the PF amount considering employer's monthly PF contribution, for the period from Jan 2011 to April 2012, 12% of Basic (60% of Salary as per the latest contract ).  I have not changed the employee's monthly contributions as the total amount deducted was given back (though monthly deductions were supposed be more for the period from Jan 2011 to April 2012 than what  was deducted). As per my computation (ref excel file attached) total PF should be Rs 247805/- instead of Rs.215300/- received.  I will appreciate if someone would kindly review the computation.

Kumar Doab (FIN)     23 September 2013

You have posted in your latest post that: â€˜Basic (60% of Salary as per the latest contract )â€™ So you have entered into an agreement to modify the salary for the period from Jan 2011 to April 2012â€¦â€¦â€¦â€¦â€¦â€¦â€¦ Amount of (Basic+ DA) before and after this period may be taken for calculation of eligibility before Ja2011 and after jan2011â€¦â€¦â€¦â€¦â€¦â€¦â€¦. . Employee does not have to contribute for Gratuity. Employer has to make the full contribution. Employer should provide and if it does not Employee should demand the calculation/computation sheet fro PF and Gratuity as supplied by EPFO and LIC.

DO you think that less PF has been deducted /deposited.

biswajit mukherjee (Manager)     24 September 2013

-----PF:

Yes, in the period from Jan 2011 to April 2012, less PF was deducted from my Gross Income.  Monthly PF deduction should have been Rs.3546/- per month (as per contract effective from 01 Jan 2011 - which states that the company will contribute PF @12% of deemed basic calculated as 60% of the Salary ) whereas Rs.780/-  was deducted per month  throughout 2011-12.  In my computation, I considered company's contribution towards PF, in 2011-12, to be Rs.3004/-(3546- 6500/12) per month, where Pension Scheme deposit is Rs.6500/- per year.   According to my computation I should have received Rs.247805/- instead of Rs.215300/-. The computation is to be checked though.

biswajit mukherjee (Manager)     20 March 2014

I am glad to inform you that I have received balance gratuity and PF including interest from my ex-employer. Mrs Chabbi Roy, Advocate, High Court, Kolkata did an excellent job. Thanks a lot to LawyersClubIndia, especially Adv Sudhir Kumar and Adv. Kumar Doab for giving me strength, courage and direction to go ahead and reach the target. Contact details of Adv. Chabbi Roy is given below: Chamber: 10 Old Post Office Street, Gr Fl. Room No. 7 left wing, Kolkata 700001 Ph. 033-2230-9045 (chamber), 033-2396-0237 and 2241-4951 (Res).

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