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Dharmendra (Manager)     27 May 2015

Payment of gratuity/ex-gratia when worked for less than 5 yr

I Have Worked For A Large Organisation For Four Years And Five Months And As Such Less Than The Period Stipulated Under The Payment Of Gratuity Act, 1972. However, As Per The Terms Of Appointment, Gratuity Is Included In My CTC And A Specified Amount Which Is Not Paid During The Employment Period. It Is Also Stated That It Is Payable Subject To The Rules And Rules Interalia Refer To The Stipulated Period Of Four Years And 190 Days. Would This Gratuity Become Payable As 'Ex-Gratia' To Me Even If I Have Not Completed The Stipulated Period Of Five Years Since It Is Included In My CTC? I received ex-gratia (instead and in place of gratuity) from my previous employer where I worked for two and half years. There also gratuity formed part of my CTC.


 7 Replies

Kumar Doab (FIN)     27 May 2015

There are detailed threads at;




initiated by employees that have successfully obtained payment of Gratuity when it was mentioned in CTC.


Gratuity is without any cost to employee.

CTC is annual/monthly pay package and promised payout.


Like you have succeeded with previous company you may succeed with this company.


Or You may procced under expert advise of an able counsel.

Vishal Luthra (Advocate)     27 May 2015

If that is part of your CTC then u can claim before 5 years. If not part of CTC then after statutory limit which is already u said. I have seen only one company in India who is following proper rules. They are paying gratuity before 5 year.

Dr J C Vashista (Advocate)     28 May 2015

I agree with expert advise of Mr. Kumar Doab, an employee do not contribute for gratuity and do ot have relation with CTC but entitled to get it after 5 years of service.

Tushar Swar (Practitioner in HR Labour Laws & Compliance)     28 May 2015

Hi All,

Post read the query by Dharmendra, i would like to share my opionion in this regards, as being HR profeesional, i have came across many queiry such as like by many employees & New comers.

Since, CTC concept is confusing many employees as per structure drawn by them, rather i would say that, many times, its miscommunicated by HR Recruiter during the offer rolle out.

Lets first understand the CTC concept, CTC means the COST TO COMPANY. the terms very clearly says that, how much cost should be bare by company for any employee, its actually for understanding of employer & employee that, how much cost is involve for getting him employed. but, those cost are not fix & vary subject duration of employement, company policy, & varies social securities laws. Eg:- PF, ESIC, Bonus Act, Gratuity act. therefore, it company mentioning the Gratuity in your CTC, it dosent mean that, it will be pay you even if your not completed 5yrs or (4 yrs  & 190 days) that the reason, many company mentioned one line under CTC structure that,It Is Payable Subject To The Rules And Rules & as per changes in the respective acts on time to time. in fact, company having the Gratuity Trust with insurance company, where they are paying the premium for libility of the same cost if occure in future. Grauity act. it self made for provide the benefits to employees, when they will loyal & honest for such long period with any orgnisation.

In term of legal point of view, employee can't be claim or file case against to company for claiming the said amount until & unless, he is not eligible as per act. 

Any more views are welcome by other expertises....

Thanks & Regards,

Tushar Swar



Kumar Doab (FIN)     28 May 2015

I am a member of a reputed HR portal also, and have been interacting with many top, senior and seasoned HR personnel for about 25 years. I have immense respect fot these sensible HR personnel. They make things simple...........and hence are effective.



One thing that I agree to Mr.Tushar Swar is that HR personnel misguide and miscommunicate ………………..however it is to be added that it is not  the recruited person/employee but the employer too.



In a haste to show bloated packages to gullible employees employers too fall for such indiscretions/trangressions.



CTC is not recognised by law.



It is a privately coined term by Employer(s) and its attornies in HR/Legal.


It is misinterpreted global fad.



The employer can very well insert Gratuity in its internal (excel) files maintained in its computers/registers for its private and internal reference but should not include it in CTC or annual/monthly pay package  negotiated with employee……..



Even if Employer(s) and its attornies in HR/Legal……………..insert “It Is Payable Subject To The Rules And Rules & as per changes in the respective acts on time to time” it does not make any difference ……………………………….



The payment of Gartuity Act 1972; Sec 4 (5) provides for beter terms of Gratuity……………



(5) Nothing in this section shall affect the right of an employee receive better terms of gratuity under any award or agreement or contract with the employer.


Thus if Gartuity is inserted in CTC it rather aids the claim of employee……………




The ‘Compulsory Insurance’ as per the Payment of Gartuity Act,1972 and even the notifications issued by many of the states e.g. Maharashtra is inserted so that employer compulsarily creates a separate and secure fund to pay for its legal/statutory obligations………………………..and thus avoid liquidation in case of default…………..





It should be clear that the monthly constributions paid by employer are not ‘Premia’ and neither the arragment is like a insurance policy. The employee does not have contribute a penny for this ‘monthly contribution by employer’ or misinterpreted ‘Premium’………….



 Even Bonus should be avoided to be inserted in CTC…………



Anything inserted in appointment letter/contract of employment/remuneration packages/CTC is a committement of payment by employer to employee………...


If CTC is just cost to employer due to presence of employee in the establishment then some employer may adventure to include the cost of various licenses that employer has to avail to function, various taxes that employer has to pay………………………….and even the detergent that is bought to scrub the floor whre employee walks…………….soap/disinfectant that is placed in washroom/loo visited by employees……………




It is clear from many of the cases employers have been loosing in courts of law……………………..that employers should avoid misadventures and must not misadventure to show fattenned packages to employees…………..


The HR personnel should advise the employer properly.



This has been discussed at length and concluded in various threads mentioned in link posted above and various other HR portals too……..


For an employee there is always a union and a lawyer and court of law.

T. Kalaiselvan, Advocate (Advocate)     03 June 2015

The detailed information and advises with proper opinions by expert Mr. Kumar Doab elicits more light to the query as well as other general information.  The querist may follow the steps suggested. 

Amit S Jain   29 March 2018

Hi Deob Kumar,

My organisation has mentioned the gratuity component in Assured compensation. So I wanted some help to send notice to recover that amount. I am leaving my organisation in 41/2 years. Any help will be greatly appreciated.

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