Madhu.T.K
Industrial Relations And Labour Laws
R.N.Khola
Labour Laws & Ir
Rajanassociates
Legal Counsel
Kalyan R
Deputy General Manager - Personnel
Korgaonkar K A
Ba,llb,mpm,dir&pm,dll&lw,d.cyber
Ashutosh Thakre
Hr Professional
Rajeev Verma
Hr Professional
SUDIPTA CHAUDHURI
Personnel Officer Cesc Ltd.
Govil Nanda
Hr Professional
Anjalisachdeva
Hr Professional
Javedmse
Consultant

Thread Started by #Govil Nanda

Hi All Can somebody provide me the latest SC Judgement reagrding calculation of Gratuity i.e (4 years & 10 months) Thanks in advance Regards Govil Nanda
24th June 2008 From India, Delhi
Dear Govil,
Me also have heard that:
As per the latest judgement of honourable Supreme Court-
An employee is eligible for gratuity if he has completed 4 years of continuous service and 240 days continuous working in 5th year.

This I have posted this in my thread, but not able to get the same till date.
SC Ruling on Gratuity Act
25th June 2008 From India, Delhi
Hi Rajeev
You are right. The case "Mettur Bearsell Ltd Vs Regional Labour Commissioner (Central) referred by Mr.Yedhulla Prakash was also reported in 1998 LLR 1072. So far I have not come across any Apex Court judgment on this.
Thanks & Regards
Kalyan R
25th June 2008 From India, Madras
Dear Member,
Welcome to CiteHR.
Then approach the Payment of Gratuity Act enforcement agency. If you are to receive gratuity under PG Act, 1972 then first decide which is your appropriate Govt. & then file a complaint before your area labour office.
[SIZE=1][B][COLOR=red][FONT=Verdana]R.N.KHOLA

5th March 2011 From India, Delhi
I Enclose herewith the judgement of Madras High Court in Favour Of paying gratuity to employerrs who have completed 4 YRS OF CONTINUOUS SERVICE AND 240 DAYS IN THE FIFTH YEAR FOR YOUR PERUSAL.
Sudipta
7th March 2011 From India, Calcutta

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Madras High Court Ruling in Mettur Beardsell's case is OK. But where is the Apex Court verdict? In the link provided by Rajeev Verma also the same case is referred and the SC ruling given by Vikramlamhe pertains to section 25F of the Industrial Disputes Act. Please correct me if I am wrong.
25F is different from Payment of Gratuity. Retrenchment compensation is available to all employees who have completed at least one year of service and that one year means 240 days of working.
Regards,
Madhu.T.K
7th March 2011 From India, Kannur
Dear
The Judgment of the Court applies to the facts of that case unless the provision is erased i.e struck down from the Law Book.
Let not HR Professionals get confused.The law is completion of 5 years.
rajanassociates
https://www.citehr.com/285737-legal-...-industry.html
10th May 2011 From India, Bangalore
Rajan Associates...

While agreeing on completion of 5 yrs but please clarify the definition of 1 completed year. If I refer to the

Section 2 A) on continuous service which reads as follows :

Section 2-A: Continuous service

For the purposes of this Act,-

(1) An employee shall be said to be in continuous service for a period if he has, for that period, been in uninterrupted service, including service which may be interrupted on account of sickness, accident, leave, absence from duty without leave (not being absence in respect of which an order [* * *] treating the absence as break in service has been passed in accordance with the standing orders, rules or regulations governing the employees of the establishment), lay-off, strike or a lock-out or cessation of work not due to any fault of the employee, whether such uninterrupted or interrupted service was

(2) Where an employee (not being, an employee employed in a seasonal establishment) is not in continuous service within the meaning of clause (1), for any period of one year or six months, he shall be deemed to be in continuous service under the employer-

(a) For the said period of one year, if the employee during the period of twelve calendar

months preceding the date with reference to which calculation is to be made, has actually worked under the employer for not less than-

(i) one hundred and ninety days, in the case of an employee employed below the ground in a mine or in an establishment which works for less than six days in a week ; and

(ii) two hundred and forty days, in any other case ;

what I decipher from the above is that one year would be considered as complete in case an employee has continuous service of 240 days if an orgn has 6 days week or 190 days in case less than 240 days.

Can you throw some light on this please...

thanks

Anjali
10th May 2011
It is right that a working of 190 days in a year will constitute one year in the case of establishments working for five days in a week. But when the two days of off are paid days, the significance of this particular proviso to section 2A has to be studied well. It will definitely apply to those who are daily rated because for them paid days in a week will be 5 days only and the two days of off will be unpaid.

In order to arrive at the 240/190 days for deciding whether the year will constitute continuous service or not, all paid days, holidays, leave with pay, lay off days, legal strike days 9for which payment is made to employees) maternity leave days (in case of female employees) etc are considered as days worked. That means, if Saturdays and Sundays (if these are two days of off) are paid holidays, then there seems to be no meaning in saying that 190 days should constitute continuous service because in such cases an employee is getting a direct bonus days of 52 days which others who work for six days in a week would not get. In the former case, included in 190 days are 104 days of off (at the rate of two days per week), say 13 national and festival holidays which are mandatory, say around 36 days leave with pay and a working of just 37 days! In the latter case it should be 139 days of physical work, 52 days of weekly off days, 13 holidays and 36 leave days.

Therefore, it should be interpreted without reference to number of days worked in a week but with reference to number of paid days in a week.

Regards,

Madhu.T.K
10th May 2011 From India, Kannur
Hi Madhu,
I have joined Tata Communication Ltd. on 2nd Jan 2007 and last working day was 05 Aug 2011. My total Continuous working days are 4 years and 215 days.. We had 5 working days and 2 days weekend off.
Now, am i eligible for Gratuity amount which is declared as part of my CTC?
I communicated the same several times to Finance team, however they rejected saying as per Tata Trust rule, i have to complete full 5 years to get my gratuity amount.
If there is a supreme court judgement on this subject, wont that applicable to Tata Trust?
2nd September 2015 From India, Bangalore
Hi Madhu,
I worked in Tata Communications Ltd from 02 Jan 2007 till 05 Aug 2011, which is total of 4 years and 215 days.. that company was working 5 day a week and as per the SC order, 4 years and 190 would qualify for gratuity amount.
In this case, is my case eligible for gratuity? The finance team is saying, as per Tata Trust rule, i have to finish 5 years?
Is SC order wont apply to trusts like Tata?
On the other hand, i am currently working in a MNC company at Hyderabad, they are considering 4 years and 190 as gratuity eligible period and paying the amount. Then why my previous employer denying this by saying, it wont apply to Tata Trust?
Need ur help to move further on this..
3rd September 2015 From India, Bangalore
Dear All,

Kindly find attached the Bare Act of the Gratuity Act 1972. The extract of the section 2A is given below:-

Also i have attached the Gratuity Act 1972 Bare Act. Therefore it is very clear that the calculation is for 4 years 240 days.

Also all organisations irrespective of their own trust have to follow the rules. Their rules can differ if they are more beneficially to the employee than the present act.

The extract is below:-

The gratuity eligibility as per Gratuity Act 1972 is 5 years of continuous service. Sub section (2) of section 4 is for calculation of gratuity and not for the eligibility of gratuity.

But as per the judgment of the Supreme Court an employee is eligible for gratuity if he has completed 4 years of continuous service and 240 days continuous working in 5th year. On the day when he completes his 240 days in the 5th year he will be eligible for gratuity.

The judgment of Supreme Court rendered under the provisions of the Industrial Dispute Act in Surendra Kumar Verma vs. Central Govt. Industrial Tribunal,[(1980) (4) S.C.C.433)], it is enough that an employee has a service of 240 days in the preceding 12 months and it is not necessary that he should have completed one whole year’s service. As the definition of continuous service in Industrial Dispute Act and Payment of Gratuity Act are synonymous, the same principal can be adopted under the act also and hence an employee rendering service of 4 year 10months 11days is considered to have completed 5 years continuous service under sec.4(2) and thereby is eligible for gratuity."

Now almost all organizations are paying gratuity if an employee has completed 4 years of continuous service and 240 days continuous working in 5th year.

Regards,

Ashutosh Thakre
3rd September 2015 From India, Mumbai
Hi Ashutosh Thakre,
Thanks for your detailed information.. So if the organization is working 5 days a week, does 5th year can be considered as 190 days?
like 4 years and 190 days if company follows 5 days week and 4 years 240 days when company follows 6 days week?
Appreciate your response.
4th September 2015 From India, Bangalore
For establishment working for 5 days in a week, 240 shall be taken as 190 days. This is as per Gratuity Act itself. But the eligibility service remains 5 years from the date of joining, though we have some court verdicts which have interpreted requirement of 240 days or 190 days, as the case may be, which is the mandatory days for deciding continuous service, as one year service provided the employee has already completed 4 years in the preceding service period. A similar ruling has come from Kerala High Court also which says that an employee who has put in 4 years and 240 days (190 days for establishments working for 5 days in a week) is eligible to gratuity considering that 240/ 190 days will constitute one year. (Sreeja Vs. Regional Labour Commissioner[2015 LLR826])
Ashutosh: Please share the Supreme Court ruling you have mentioned in your post.
Madhu.T.K
4th September 2015 From India, Kannur
Dear Ashutosh Thakre ji,

The SC judgment which you have quoted is not pertaining to Gratuity Act but it is pertaining to provisions under ID Act.

In this thread four years back, Mr. Madhu and Rajanassociates had given their opinion. Mr. Madhu is a Super Moderator of our Forum having very vast experience in IR. Rajanassociates are Legal Counsel / Advocate practicing for very long time in Labour Laws field. Still you differed with them.

One can differ with any one but with full equipped knowledge.

I want to ask you one simple question. If there is a Judgment on this subject by SC in 1980 then how the Madras HC and Kerala HC admitted the matter on the same subject after 1980?

We are concern with the Law and not what is being Practice. The Practice is adopted by the people who presumption that what they know is the Law. In of the recent threads one HR Manager said that Gratuity is deducted from salary and given later-on separation.

I am sorry. I would not said all this. I could not control myself.
4th September 2015 From India, Mumbai
Dear All, The extract of the case is attached herewith. The SC ruling i shall update by coming Monday. Regards, Ashutosh Thakre
4th September 2015 From India, Mumbai

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Dear Mr. Koregaonkar,
Thanks for the frank reply.
I know that the case was under the ID ACT, but it was pertaining the gratuity and the SC has clearly said that as the definition of continuous service in Industrial Dispute Act and Payment of Gratuity Act are synonymous, the same principal can be adopted under the act also and hence an employee rendering service of 4 year 10months 11days is considered to have completed 5 years continuous service under sec.4(2) and thereby is eligible for gratuity.
Hope i have clarified your doubt.
Regards,
Ashutosh Thakre
4th September 2015 From India, Mumbai
Dear Thakre ji,
You have not answered to my question.
I have no doubt in my mind and I am very clear on the subject. I started feeling that I am unnecessary spending my time in sharing my knowledge on this forum.
.................................................. .................................................. .................................................. .................................................. .................................
4th September 2015 From India, Mumbai
Dear Learned Members of this Forum,

To conclude this subject, please find attached a judgment of Hon’ble Supreme Court in Grand Kakatiya Sheraton Hotel & Towers

Employees & Workers Union v. Srinivasa Resorts Ltd. & Ors. delivered on 27.02.2009.

Hon’ble Supreme Court in this case upheld the judgment of the Andhra Pradesh High Court, by which that court had struck down as unconstitutional the provisions of the Andhra Pradesh Shops and Establishments Act by which gratuity was made payable even to employees who had not completed 5 years service as per the Payment of Gratuity Act, 1972.

Given below is some text verbatim on page 11 of the Judgment:

"It is already held by this Court time and again that the concept of gratuity as conceived in the Payment of Gratuity Act and even earlier to that in labour jurisprudence is that gratuity is a reward for long and continuous service. It is for the first time by that Act, a worker or an employee was made entitled to the gratuity by his rendering continuous service for five years. If this is so, then providing only one year for entitlement to get the gratuity, is certainly unreasonable."

In light of above, my humble request to the learned members of this forum to conclude this subject. No further contribution from my side will be done on this topic unless some one raise a question of law.
4th September 2015 From India, Mumbai

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Dear Mr. Koregaonkar,
My humble request is to please clarify, where in the attached case has the court ordered at Contunious 5 years of working is not 4 years and 240 days. The entire case is in a different angle.
The discussion which are all are trying to understand is if 5 contunious years of service is equalient to 4 years and 240/190 days.
Coming to your question as to why the court admitted the cases if they had a verdit before, i am very sorry, but me not being a lawyer, i shall not be able to comment on the same.
Regards,
Ashutosh Thakre
5th September 2015 From India, Mumbai
Dear Ashutosh ji,
Thanks for appreciating my last post.
My humble submission here is as under:
On this subject I have contributed enough with the limited knowledge I have. I do not wish to contribute further as said earlier. Let's experts / senior members contribute.
5th September 2015 From India, Mumbai
#Anonymous
Dear Sir/s,
From the above discussions, I understand that if an organisation is working 6 days a week, in that case 240 days of continuous service in the 5th year, is sufficient to be considered as complete year service for payment of gratuity, which requires 5 years of continuous service.
The 240 days of continuous service in the 5th year mentioned here are completed in 10 months and 11 days (=315 days = 45 weeks) in the 5th year of service.
Can someone explain how 240 days continuous service gets completed in 10 months and 11 days ?
Regards,
Harsh Gupta
13th November 2017 From India, Gandhinagar
I did not get what exactly your query is. If your concern is about 240 days over a period of 10 months and 11 days I would like to say that 240 days is not the days physically present but the days for which payment of wages have been made. That means, it should include all holidays, weekly off days and paid leave days.
There have been discussions over the issue of 240 days in the 5th year as a qualifying period for gratuity for a long time and the situation remain the same. Still, if you follow the Payment of Gratuity Act, the gratuity qualifying service is 5 years. It is true that in order to be considered as continuous service for the purpose of gratuity a period of 12 months should have at least 240 paid days. It is on this basis that many of us say that if you have 240 paid days in the 5th year you will get gratuity because one year means 240 days. The two judgements that many of us quote also have also interpreted the provision of one year service as 240 days.
Madhu T K
14th November 2017 From India, Kannur
#Anonymous
Sir,
In one of the above posts following point has been mentioned with reference to judgement of the Supreme Court-
"The judgment of Supreme Court rendered under the provisions of the Industrial Dispute Act in Surendra Kumar Verma vs. Central Govt. Industrial Tribunal,[(1980) (4) S.C.C.433)], it is enough that an employee has a service of 240 days in the preceding 12 months and it is not necessary that he should have completed one whole year’s service. As the definition of continuous service in Industrial Dispute Act and Payment of Gratuity Act are synonymous, the same principal can be adopted under the act also and hence an employee rendering service of 4 year 10months 11days is considered to have completed 5 years continuous service under sec.4(2) and thereby is eligible for gratuity."
My query is related to requirement of service period for eligibility of Gratuity-
My organisation does not work on 2nd and 4th Saturday every month. Hence, my case falls in between 5 day working and 6 day working.
My service period in the organisation is 4 yrs and 244 days as on last date of my services.
Whether I will be eligible for receiving Gratuity Payment from my organisation?
Regards
14th November 2017 From India, Gandhinagar
#Anonymous
Also the organisation does not work on all Sundays along with 2 Saturdays
14th November 2017 From India, Gandhinagar
As already pointed out, even when the Madras High Court view was in existence many authorities under the Payment of Gratuity Act had refused to grant gratuity saying that there is no Supreme Court view on this and since the Act makes it very clear that completion of 5 years is mandatory for being eligible for gratuity, an employee who has not completed 5 years but has a service of 240 days in the fifth year is not eligible to get gratuity. When the Kerala High Court verdict came, the same was again opened and the appropriate authorities in Kerala started ordering payment of gratuity to persons who have not completed 5 years of service but have had 4 years and 240 days of service.
The issue of retrenchment compensation is different. In order to be eligible to get retrenchment compensation, just a service of one year is sufficient. In the case of gratuity, it is not one year but 5 years. It is true that 240 days of service constitutes one year under both the Act. It is so in the case of eligibility for leave under Factories Act and Plantations Labour Act.
For eligibility of gratuity one should have worked for not less than 5 years continuously with each year having at least 240 days (paid days). If you have worked for more than 5 years, say, 8 years but in between there are, say, four years with service of less than 240 days, the employee will not get gratuity. In this context we should also consider that if the employee has not "worked" for 240 days but was "employed" for 240 days, he will get gratuity. And if an employee "employed", has remained absent without leave and as a result of his absence, he could not work for 240 days, then he will not get gratuity. These equations are true in the case of temporary workers who are not "employed" continuously on the rolls of the employer but are called or engaged to "work" whenever required.
Therefore, the first qualifying parameter is 5 years of service and the second thing is that each year should have 240 days pay days. When the first milestone is not reached, naturally, he will disqualify from gratuity. At the same time, Madras High Court and Kerala High Court, having interpreted the Gratuity Act to make it available to persons who were not employed for 5 years but were employed for 4 years and 240 days in the 5th year, we can also follow it. But, if your employer rejects saying that you have not completed 5 years and then the Appropriate authority, ie, the Labour Officer, supports it, you will have no other choice but to prefer a complaint interpreting the law as above and quoting the above two verdicts.
Madhu T K
14th November 2017 From India, Kannur
Hi all
Please let me know that, if an employee works 9 years and 7 month what will be his number of served years whether 9 years or 10 years.
regards / ramesh/Ambur.
21st July 2018 From India, Mumbai
Dear Ramesh ji,
I welcome your first ever post on this forum.
I am producing section 4(2) of POG Act verbatim as under:
Sec 4(2) For every completed year of service or part thereof in excess of six months, the employer shall pay gratuity to an employee at the rate of fifteen days' wages based on the rate of wages last drawn by the employee concerned.
What does it mean part thereof in excess of six months?
According to this, more than six months is to be taken as full year.
21st July 2018 From India, Mumbai
Dear Keshav Korgaonkar Ji,
Thank you very much for your valuable reply and can you give me any case reference for the same.
thanks and regards.
ramesh/Ambur.
24th July 2018 From India, Mumbai
Dear Ramesh ji,
For every completed year of service or part thereof in excess of six months, the employer shall pay gratuity to an employee at the rate of fifteen days’ wages based on the rate of wages last drawn by the employee concerned. This is the Law. I have given you the provision verbatim. There is no ambiguity in it. The wordings are beyond clarity. Still you want case reference. Why?
You are a HR professional. If you have a doubt in the provision or have a dispute in it, you are free to represent your case, set a case law and and give the case reference to this forum.
24th July 2018 From India, Mumbai
Hi I have completed 1o yrs in private school organisation.But school denied to give gratuity than i put case to education dept in punjab now they asked me that school has given the letter that person should have age of 58 or completed 20 years in organisation than they are eligeble.
Now education dept asked me if you have law orders or any written information than provide us.
Please help if anybody help me.
Regards
Jasmeet
8427028087
3rd September 2018 From India, Delhi
This is not a subject of education department but it is a subject of your area Labour Officer. You may approach the Labour department. They may not require any citation or bare Act to take action about the school.
4th September 2018 From India, Kannur
Dear All.
While working with one of private company, it was practice that, even in case of eligible permanent workers who has rendered service more than 5 years, they considered those years in which the worker has physically present for 240 days. The management's interpretation was that, the gratuity is payable according to Section 2 A (2) (a) (ii) of the Payment of Gratuity Act, extract of the clause is shortly stated below.
[2A. Continuous service.—For the purposes of this Act,—
(1) an employee shall be said to be in continuous service ............................
(2) where an employee (not being an employee employed in a seasonal establishment) is not in continuous service within the meaning of clause (1), for any period of one year or six months, he shall be deemed to be in continuous service under the employer—
(a) for the said period of one year, if the employee during the period of twelve calendar months preceding the date with reference to which calculation is to be made, has actually worked under the employer for not less than—
(i) one hundred and ninety days,....................................
(ii) two hundred and forty days, in any other case;
After reference of provisions of the Act & some case laws as well as discussions had with seniors, my assumptions is, the above clause may applicable to Badali/Temporary workers who are working in absence of permanent worker for time being.
My query is, Is it legal and proper to apply above clause of 240 days actually worked in each year for eligibility of gratuity payment to permanent employees ? Is there any case law in which Hon'ble Court may have explain in details or made interpretation on the above clause is not applicable for the gratuity payment of permanent worker ?
Shaikh. I.Y.
Manager HR.
10th September 2018 From India, Nashik
Very simple, you may just read 240 days as 240 paid days. That means this 240 days should include all weekly off days, paid leaves and holidays. Obviously, the permanent employees will be paid for 30/31 days a month, they will be eligible for holidays with pay, they will also be given paid leaves like CL or PL and of course in the case of female employees, the maternity leave days also. Therefore, it is better to take 240 as 240 paid days. Even for a permanent worker/employee who fails to meet this 240 targets by way of regular absenteeism, being absent without leave etc gratuity shall be refused for such years for which the qualifying 240 paid days is not there.
11th September 2018 From India, Kannur
I think till the issue is not clear, as per the provisions of the Act, in case of permanent workers where his total paid days are below 240 days because of absenteeism, in that case management has conduct domestic enquiry and if the charges of absenteeism leveled against him are proved the decision of break in services has to be taken. Then only the particular year in which the worker has not get 240 paid days could not considered for gratuity.
Shaikh.I.Y.
Manager HR.
11th September 2018 From India, Nashik
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