Loyalty Pays

wealthymatters.comJob-hopping can increase your pay, but good old loyalty also has its perks. Stay on with your employer for five years or more, and you are entitled to gratuity when you resign, retire or are retrenched. This monetary reward to be paid by your employer in recognition of your years of service is mandated by the Payment of Gratuity Act. Most establishments employing 10 or more workers fall under the Act.

The amount you get as gratuity depends on the number of years you have served and the last drawn monthly salary. Roughly, you get half a month’s Basic and DA for every completed year of service. Here’s the formula to calculate gratuity: (Number of years of service) * (Last drawn monthly Basic and DA) *15/26. So, if you have served 30 years and draw monthly Basic and DA of Rs 20,000 when you leave the job, you get gratuity of Rs 3,46,154 calculated as (30 * 20,000 *15/26). Your employer can choose to pay you more but the maximum amount of gratuity according to the Act cannot exceed Rs 10 lakh. Amount paid above this will be in the nature of ex-gratia — something voluntary and not mandated according to law.

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CTC And Take Home Salaries


The early days of your business are likely to be pretty lean ones money-wise.At the time,if you get discouraged by all the great salaries your contemporaries are raking in and are thinking of giving up,find out if people around you are talking of CTC or take home salaries.Then consider how much they keep post-tax,and then compare it with what you manage to keep for yourself and then decide.

CTC or cost to company is what a company spends on an employee. If something is an “Expense” for a company because of an employee, its part of his/her CTC,

So,companies often add their contribution to the EPF,gratuity(which is payable 5 years from the date of joining),superannuation,leave encashments etc. to the CTC. If employees leave the company after a short while they may never see these incomes. Read more of this post

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