I wanted to know the gratuity provision to be made in case of following
Company is in the business of manpower supply. so it has to take employees on its payroll. for those employees, company enters into an agreement with the customer that at the time of their retirement, if gratuity is payable then it will be fully reimbursed by that client. Now at the time of making provision as per AS 15, how the provision will be calculated. Company has to provide for its core employees which is ok. but for reimbursable part what treatment should be given in the accounts
03 August 2010
See if these kind of employees are hired only for catering requirements of the client, then ofcourse there is no liability of the agency in this regard. Only principal is liable to make payment of gratuity so provision also should be made at his end.
In case these are regular employees of agency and are rotated among various clients, then agency has to make provision as per As 15.
03 August 2010
Thanks Sir for your reply. But the emploees are on the comapny's payroll. If they are the employyes of the company then AS 15 applies to them also. AS 15 does not give any clarification for such employees.
04 August 2010
The Company has not make provision in its books. The agreement between the company and its clients is an issue between these two parties.
The responsibility lies with the Company only. The fact that the amount will be reimbursed by the client makes no difference.
10 August 2010
Company has to make the provision but what is the accounting entry as the amount of gratuity payable to other staff is fully reimbursable
CAclubindia
