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Anson Samuel   26 June 2025

Full & final pymt discrepancy and gratuity payment denied

I joined this company in March 2019, since it was a US company but started operations in India the total staff was 7 employees. I worked here for 5.5 yrs and was handling the team, until 06 Aug 2024, they laid me off stating business strategies as the reason. Now they informed me that I can leave the job by giving the resignation same day and would receive the salary for Aug 2024 and on all the documents my last working day would be 31st Aug 2024. So now here are my queries - First query - In my employment letter, it clearly mentions that the employer should pay me one month's gross salary which technically should be until 6th Sep, but they paid me only until 31st Aug. Please correct me if I am wrong. Second query is - The CTC always had a component for Gratuity and they also mentioned that it will be paid as per the Gratuity Act, but now they have denied it saying that we are less than 10 employees and it does not apply to the company, but then why it was a part of the CTC. At the time of leaving I have completed 5.5 yrs with the company and I believe I am entitled to the Gratuity amount. Please help me resolve this.


 2 Replies

kavksatyanarayana (subregistrar/supdt.(retired))     26 June 2025

A CTC(cost to company) employee is eligible for gratuity if they complete at least 5 years of service.  You are eligible to get gratuity as you have completed 5.5 years of service.  As per the offer letter, the company shall pay the salary up to the 6th.  They paid up to the 31st, so you lose 6 days' salary.  You ask for it.

T. Kalaiselvan, Advocate (Advocate)     26 June 2025

A company with only 7 employees is generally not liable to pay gratuity under the Payment of Gratuity Act, 1972.

The Act applies to establishments that employ 10 or more persons.

Once a company falls under the purview of the Act by employing 10 or more employees, it remains covered even if the employee count drops below 10. 

 Even if gratuity is included in the Cost to Company (CTC), it doesn't change the legal obligation.

While gratuity is often included in the CTC, it doesn't change the fact that a company with fewer than 10 employees is not legally bound to pay it. 

 


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