Industrial Relations And Labour Laws
Assistant Human Resource Manager
Human Resource & Indistrial Relation
+2 Others

Dear All,
Please help me regarding the eligibility of the employee who have completed approx 4.7 months in the organization and the copany now is asking them to leave because of the transformation happening in the organization.
The employee has been asking for the compensation against the gratuaity payment on the ground that they want to serve the rest of the tenure.
Please suggest in case there is any statutory obligation on the part of the co. to pay them the gratutity amount.
Thanks and Regards,
3rd December 2008 From India
Statutory obligation of employer to pay gratuity comes only when an employee leaves after serving at least for 5 years. But there exists a court ruling allowing gratuity to those who have completed 4 years and 240 days in the fifth year.
In your case, the employee is not leaving at his own will but you are terminating his service although officially you will collect resignation letter. If suppose, he does not resign then you should proceed with termination. If an employee is terminated, naturally, he should be paid termination compensation which will again be equal to 15 days pay for every completed year of service (similar to gratuity). Therefore, it is advisable to pay him gratuity. Again, as pointed out by me, as there exists a ruling of court to pay gratuity even if an employee is not eligible as per the Payment of Gratuity Act, it is better to treat his leaving very cordial.
3rd December 2008 From India, Kannur
Dear Kritika,
If you have any new suggestion to what I have posted in reply to Nesh's question you post it. If you are marketing the new website do it in separate forum with a new post. I have also visited the so called site, but I didn't find any thing new from citehr. Yes, I found some postings which were earlier made in citehr. I have also noticed a PPt on ESI many provisions of which are old without reference to the recent amendments.
While making comments ensure that there are so many members in citehr who are highly experienced in Personnel Management/ HR who will hurt.
3rd December 2008 From India, Kannur
As per the gratuity act ,an employees is eligible for gratuity only on completion of 5 yrs,but if u see definition of continuous service as per section 2A (sub sect 2b),an employee deemed to be in continuous servive if is put in the service for 120 days.
In view of the above an emoplyee worked for 120 days during 7 months ,then he will become eligible for Gratuity.
For cmoputing gratuity amount u have to consider fifteen days average pay for all completed year of contiuous service as per sect.4(2) ,as any excess of six months service would be considered for computation.
P George
6th December 2008
Dear Mahu,Plz explain this termination compensation, as i heard this term first time. please explain in detail. from where it is derived etc.RegardsRanjeet
6th December 2008 From India, New Delhi
Dear Ranjit,
Termination compensation means retrenchment compensation payable as per provisions of Industrial Disputes Act. Under the ID Act, if any employee who has been in continuous service of at least one year is retrenched, he shall be given compensation which shall be equal to 15 days average pay for every completed year of service.
Dear Mr. George,
Your interpretation of continuous service as per section 2A is correct. However, the reference to continuous service here will be made inorder to determine whether an employee who has actually been on roll for more than 5 years and ensure whether his service was otherwise interrupted.
8th December 2008 From India, Kannur
Dear Madhu,Thanks, But for evry completed year means that we have to pay up to the time that he will age of superannuation.If a person is terminated in reasons of misconduct, than we have to pay termination compensation or not.Plz reply.RegardsRanjeet
8th December 2008 From India, New Delhi
Completed year of service will be taken upto the date of leaving for whatever reason, viz, resignation, superannuation, disability or termination. In case of death of employee, the qualifying phrase of 5 years of continuous service is not applicable for payment of gratuity to the dependents.
If an employee is terminated for misconduct, he is to be paid gratuity provided the misconduct is not of severe nature and the enquiry officer who conducted the domestic enquiry has awarded ' discharge' and not ' dismissal'. In case of dismissal, however, no gratuity is paid and dismissal is made only when the misconduct is of very severe nature.
9th December 2008 From India, Kannur
Dear Madhu,Thanks.For Example:-If a persom had joined on 01/02/2000 and terminated on 31st january, 2008, than we have to take retrencment compensation for 8 years only.I am Right or Not? Plz explian the term Discharge and Disissal in details by giving examole.RegardsRanjeet
9th December 2008 From India, New Delhi
An employee joined on 1-2-2000 and leaving on 31-1-08 has 8 years of service. If terminated, he should be given retrenchment compensation for 8 years @ 15 days salary for every completed year of service. This will be in addition to the gratuity payable to him and gratuity amount will also be calculated @ 15 days for 8 years.

Termination of service for gross negligence and misconduct may be dismissal from service. An employee will be dismissed only when the misconduct is of very severe nature for which maximum punishment is to be awarded, say for example, misbehaving/ physical harassment of employees of opposite sex, manhandling others in the office, causing damage to property due to gross negligence etc, whereas, only discharge is awarded for absence from duty, sleeping while on duty, misappropriation of cash (depending upon the amount involved dismissal can also be awarded) etc. In case of discharge, unpaid salary, leave encashment, gratuity etc will be given whereas, nothing is paid if he is dismissed.


10th December 2008 From India, Kannur
Dear Madhu,Thanks for your answers.Plz also answer my quesrry in laws section with the name pf tax deduction and explanation without warning leter.RegardsRanjeet
10th December 2008 From India, New Delhi
Dear Madhu,
Thanks for your efforts. Please let me know two things -
1. As per law an employee becomes eligible for gratuity after how many years, months and days (I think it is 4 years 10 months and some days) Please give the exact duration. Because I think it is not complete 5 years.
2. I want to have sound knowledge of C& B, Labour laws and taxation. Please suggest the name of books where I can found the relevent info.
10th December 2008 From India, Faridabad
As per Payment of Gratuity Act, it is 5 years and there are cases of refusing gratuity for an employee who had completed 4 years 11 months and 10 days (P. Raghavalu & Sons Vs. Addl. Labour Court, AP). However, once an employee becomes eligible for gratuity after having completed 5 years, any fraction of years in excess of six months shall be treated as one year for calculating the amount of gratuity. As such one who leaves after 6 years and seven months shall get gratuity for 7 years.

Similarly, continuous service has been intrepreted as uninterrupted service and one who has worked at least for 240 days (above the ground) or 190 days (below the ground, say mine) shall be treated as had continuous service.

Adopting this view there seems to be court verdicts allowing an employee to get gratuity provided he had worked for 4 years and 240 days in the fifth year. I do not have any copy of the said verdict. I believe that Madras High Court and Delhi High Court have made ruling as above mentioned.


11th December 2008 From India, Kannur
Dear madhu as you used superannuation in you last comment can you share with us in detain regarding that . 1.what is superannuation ? 2. difference between superannuation and pf ?
18th December 2008 From India, Hyderabad
By superannuation is meant the retirement on attaining the age specified in the standing orders or contract of appointment. It may vary from 55 years of age to 60 years depending upon the company policy. On retirement, whatever benefits are given are called superannuation benefits. It includes monthly pension, if any, also. Gratuity is also payable when an employee leaves the organisation on attaining the age of superannuation.
PF is different in the sense that it is a fund made by way of contribution by employee himself with a share of employer. That will be paid by the Employees Provident Fund Organisation at the time the employee leaves due to any reason including superannuation. Provident Fund Pension is also paid by the EPFO though the amount represents the one contributed by the employer.
19th December 2008 From India, Kannur
Dear Madhu i have a doubt about the retirement age as mentioned by you " in between 55 to 60" can you tell me where or in which organisation employee retire at 55 ? sanjeev
19th December 2008 From India, Delhi
In Kerala State there are private sector organisations which follow the state government employees' retirement age which is 55 years. Regards, Madhu.T.K
22nd December 2008 From India, Kannur
Dear Madhu
thanks for quick reply
i have a small doubt , i came to know when to hr people chating on superannuation saying " we are providing to our employees both pf and superannuatio O! its greate " out of 2 hr's one works in retail business ( provisionals).
my doubt is if the above is true how the bifercation of salary will be eg. we will include pf of the sides in ctc by caculating on basic .24 %
how we will do for superannuation benefits ?
is it only employer obligation to pay the employee like Gratuity?
ple. discuss.
22nd December 2008 From India, Hyderabad
sir/ mam, i have been in continuous service with an organisation for 4 years 7 months working 5 days / week . Am i eligible for gratuity.
8th December 2013 From India, New Delhi
Add Reply Start A New Discussion

Cite.Co - is a repository of information created by your industry peers and experienced seniors. Register Here and help by adding your inputs to this topic/query page.
Prime Sponsor: TALENTEDGE - Certification Courses for career growth from top institutes like IIM / XLRI direct to device (online digital learning)

About Us Advertise Contact Us
Privacy Policy Disclaimer Terms Of Service

All rights reserved @ 2019 Cite.Co™