Information about Gratuity

Need information on gratuity - Can that be a part of your CTC if we need to remove that component from the CTC in between what would be the procedure while doing salary restructuring for the employees?


Hi @karpagavalli ,

The term CTC (cost-to-company) includes the overall cost of an employee to the company that is not only the wages but also the other salary components such as the house rent allowance, statutory contributions (PF, Gratuity), benefits (food coupons), medical insurance, taxes, and other associated costs.

Gratuity is a statutory obligation on the employer. As per the Payment of Gratuity Act, extends to the whole of India, and applicable to -

  • every factory, mine, oilfield, plantation, port and railway company;
  • every shop or establishment within the meaning of any law for the time being in force in relation to shops and establishments in a State, in which ten or more persons are employed, or were employed, on any day of the preceding twelve months;
  • such other establishments or class of establishments, in which ten or more employees are employed, or were employed, or, any day of the preceding twelve months, as the Central Government may, by notification, specify in this behalf.
  • a shop or establishment to which this Act has become applicable shall continue to be governed by this Act notwithstanding that the number of persons employed therein at any time after it has become so applicable falls below ten.

Kind regards,
Bhuvana Anand