Gratuity Definition 

Purpose

This process describes the configurations necessary for the Gratuity functionality.

Prerequisites

·        You have configured the Pay Scale Grouping for Allowances for the employees. This configuration is required for the system to identify employee eligibility for gratuity.

·        You have configured the wage types that form the Gratuity basis through the table view Processing Classes, Cumulations, and Evaluation Classes (V_512W_D). The Gratuity Basis wage type (/116) stores the basis for gratuity.

Process Flow

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       1.      Define the trust(s) in which your company maintains employee gratuity amount. You must define the name of the trust, and the Trust ID

To do so, go to the IMG under Payroll India ® Retirement Benefits ® Maintain Gratuity Trust ID

The Personal IDs infotype (0185) Gratuity for India subtype (03), displays options as per the Trust IDs that you have configured in this IMG activity.

The system calculates gratuity as per the Gratuity Act. If the rate of gratuity provided by the company is higher, the system will instead, compute gratuity as per the company rules.

       2.      Define the types of gratuity contribution and the wage types associated with the different types of gratuity contributions. Contributions to gratuity can be on a monthly or on an annual frequency.

For more information, refer to the IMG under Payroll India ® Retirement Benefits ®  Maintain Gratuity Contrib. Freq. and Related Wage Types.

In the IMG activity, you have the option of creating customer specific wage types for gratuity. You can do so by copying the following default wage types:

¡        /3G1 – Stores the monthly gratuity contribution

¡        /3G2 – Stores the annual gratuity contribution

¡        /3G3 – Stores the sum of splits in the gratuity period

       3.      Specify the percentage of gratuity basis that the system must use for gratuity computations.

To specify the percentage, go to the IMG under Payroll India ® Retirement Benefits ® Define Contribution Rates for Gratuity.

       4.      Specify the minimum number of years that the employee must work in the company, to become eligible for gratuity.

To specify the minimum number of years of service criteria, go to the IMG under Payroll India ® Retirement Benefits ® Maintain the Eligibility Years for Gratuity.

While processing payroll, the system checks the min. no. of years constant (GRTYR), which you maintain using this IMG activity, for eligibility.

Configurations for Retrospective Calculation

If you have created customer specific wage types, then you must:

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       1.      Add the customer specific wage types to the To check whether Gratuity contributions took place rule (INGR).

During retrospective calculations, the system either imports or does not import the gratuity wage types from the previous results, based on this rule.

To add the wage types to the To check whether Gratuity contributions took place rule (INGR), go to the IMG under Payroll India ® Retirement Benefits ® Check for Gratuity Contribution.

       2.      Add the customer specific wage types to the Passing wage types from ORT to IT for Gratuity Retro rule (IN51).

You might have already contributed towards gratuity in the previous payroll run for the period. In this case, you can set a rule that the employer need not contribute again, during the retrospective payroll run.

To add the wage types to the Passing wage types from ORT to IT for Gratuity Retro rule (IN51), go to the IMG under Payroll India ® Retirement Benefits ® Maintain Wagetypes to be passed during Retro Runs.