Yes as per the payment of Gratuity Act you are eligible for Gratuity, which is calculated at the rate of (15/26 )* completed years of service and the wage component of Basic + DA proportionate to that the calculated factor should be given as Gratuity.
However if the Employer wants he can give over and above the calculated amount at his discretion.
From India, Mangaluru
Since, Gratuity is a lump sum payment to employee when he retires or leaves service. It is basically a retirement benefit to an employee so that he can live life comfortably after retirement. However, under Gratuity Act, gratuity is payable even to an employee who resigns after completing at least 5 years of service.
From India, Bahadurgarh
Gratuity is a lump sum payment to employee when he retires or leaves service. It is basically a retirement benefit to an employee so that he can live life comfortably after retirement. However, under Gratuity Act, gratuity is payable even to an employee who resigns after completing at least 5 years of service.
In DTC Retired Employees v. Delhi Transport Corporation 2001(4) SCALE 30 = 2001 AIR SCW 2005, it was observed that gratuity is essentially a retiring benefit which as per Statute has been made applicable on voluntary resignation as well. Gratuity is reward for good, efficient and faithful service rendered for a considerable period.
Act provides for minimum gratuity only – The Gratuity Act provides only for minimum gratuity payable. If employee has right to receive higher gratuity under a contract or under an award, the employee is entitled to get higher gratuity. [section 4(5)].
Employers liable under the scheme - The Act applies to every factory, mine, plantation, port, and railway company. It also applies to every shop and establishment where 10 or more persons are employed or were employed on any day in preceding 12 months. [section1(3)]. Since the Act is also applicable to all shops and establishments, it will apply to motor transport undertakings, clubs, chambers of commerce and associations, local bodies, solicitor’s offices etc. , if they are employing 10 or more persons.
Employees eligible for gratuity – ’Employee’ means any person (other than apprentice) employed on wages in any establishment, factory, mine, oilfield, plantation, port, railway company or shop, to do any skilled, semi-skilled or unskilled, manual, supervisory, technical or clerical work, whether terms of such employment are express or implied, and whether such person is employed in a managerial or administrative capacity. However, it does not include any Central/State Government employee. [section 2(e)]. Thus, the Act is applicable to all employees - workers as well as persons employed in administrative and managerial capacity.
Gratuity is payable to a person on (a) resignation (b) termination on account of death or disablement due to accident or disease (c) retirement (d) death. Normally, gratuity is payable only after an employee completes five years of continuous service. In case of death and disablement, the condition of minimum 5 years’ service is not applicable. [section 4(1)].
The Act is applicable to all employees, irrespective of the salary.
Amount of gratuity payable - Gratuity is payable @ 15 days wages for every year of completed service. In the last year of service, if the employee has completed more than 6 months, it will be treated as full year for purpose of gratuity. - - In case of seasonal establishment, gratuity is payable @ 7 days wages for each season. [section 4(2)].
Wages shall consist of basic plus D.A, as per last drawn salary. However, allowances like bonus, commission, HRA, overtime etc. are not to be considered for calculations. [section 2(s)].
In case of employees paid on monthly wages basis, per day wages should be calculated by dividing monthly salary by 26 days to arrive at daily wages e.g. if last drawn salary of a person (basic plus DA) is Rs. 2,600 per month, his salary per day will be Rs. 100 (2,600 divided by 100). Thus, the employee is entitled to get Rs. 1,500 [15 days multiplied by Rs. 100 daily salary] for every year of completed service. If he has completed 30 years of service, he is entitled to get gratuity of Rs. 45,000 (Rs. 1,500 multiplied by 30). Maximum gratuity payable under the Act is Rs. 3.50 lakhs (the ceiling was Rs. 1,00,000 which was increased to 2.50 lakhs on 24.9.97 by an ordinance which was later increased to Rs 3.50 lakhs while converting the ordinance into Act].
Maximum gratuity payable – Maximum gratuity payable is Rs 3.50 lakhs. [Section 4(3)]. [Of course, employer can pay more. Employee has also right to get more if obtainable under an award or contract with employer, as made clear in section 4(5)].
Income-Tax exemption - Gratuity received upto Rs. 3.50 lakhs is exempt from Income Tax. Gratuity paid above that limit is taxable. [section 10(10) of Income Tax Act]. - - However, employee can claim relief u/s 89 in respect of the excess amount.
No Compulsory insurance of gratuity liability – Section 4A provides that every employer must obtain insurance of his gratuity liability with LIC or any other insurer. However, Government companies need not obtain such insurance. If an employee is already member of gratuity fund established by an employer, he has option to continue that arrangement. If an employer employing more than 500 persons establishes an approved gratuity fund, he need not obtain insurance for gratuity liability. - - However, this section has not yet been brought into force. Hence, presently, such compulsory insurance is not necessary.
Gratuity cannot be attached - Gratuity payable cannot be attached in execution of any decree or order of any civil, revenue or criminal court, as per section 13 of the Act
Arun K Mishra
From India, Bahadurgarh
Applicability fo Gratuity Act depends on
1) Applicability of the act with respect to nature of organization you are working in. (Private / Gov.)
2) You had mentioned that you are with the company since five years, although your service should be Contineous Service (uninterupted services includes lay off / leaves / leave with wages)
Its your right to ask the Gratuity.you can now claim for Gratuity bacause you were in the Company for 5 years.Its starts from your date of joining so dont bother about Probation preiod.This will not place any role in the Gratuity calculation.
From India, Vadodara
ques 1: does that mean only in these 2 cases employer shall pay gratuity
ques 2: We dont have any gratuity fund or so like its said above so in these circumstances too, does the employer need to pay?
From India, Chandigarh
From India, Ahmadabad
According to shops & Estabishment act 240 days employee want to work.i.e so u have to complete(240*5).if u have worked for those many days means u r applicable to get Gratuity as per company norms.
From India, Hyderabad
Payment of gratuity.
4. (1) Gratuity shall be payable to an employee on the termination of his employment after he has
rendered continuous service for not less than five years, —
(a) on his superannuation, or
(b) on his retirement or resignation, or
(c) on his death or disablement due to accident or disease :
Provided that the completion of continuous service of five years shall not be necessary where the
termination of the employment of any employee is due to death or disablement:
12[Provided further that in the case of death of the employee, gratuity payable to him shall be
paid to his nominee or, if no nomination has been made, to his heirs, and where any suchnominees or heirs is a minor, the share of such minor, shall be deposited with the controlling
authority who shall invest the same for the benefit of such minor in such bank or other financial
institution, as may be prescribed, until such minor attains majority.]
Explanation : For the purposes of this section, disablement means such disablement as
incapacitates an employee for the work which he was capable of performing before the accident or
disease resulting in such disablement.
(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 :
Provided that in the case of a piece-rated employee, daily wages shall be computed on the
average of the total wages received by him for a period of three months immediately preceding the
termination of his employment, and, for this purpose, the wages paid for any overtime work shall
not be taken into account:
Provided further that in the case of 13[an employee who is employed in a seasonal establishment
and who is not so employed throughout the year], the employer shall pay the gratuity at the rate
of seven days’ wages for each season.
14[Explanation: In the case of a monthly rated employee, the fifteen days’ wages shall be
calculated by dividing the monthly rate of wages last drawn by him by twenty-six and multiplying
the quotient by fifteen].
(3) The amount of gratuity payable to an employee shall not exceed 15[15a[three lakhs and fifty thousand] rupees].
(4) For the purpose of computing the gratuity payable to an employee who is employed, after his
disablement, on reduced wages, his wages for the period preceding his disablement shall be taken
to be the wages received by him during that period, and his wages for the period subsequent to
his disablement shall be taken to be the wages as so reduced.
(5) Nothing in this section shall affect the right of an employee to receive better terms of gratuity
under any award or agreement or contract with the employer.
(6) Notwithstanding anything contained in sub-section (1), —
(a) the gratuity of an employee, whose services have been terminated for any act, wilful
omission or negligence causing any damage or loss to, or destruction of, property belonging
to the employer, shall be forfeited to the extent of the damage or loss so caused.
(b) the gratuity payable to an employee 16[may be wholly or partially forfeited]—
(i) if the services of such employee have been terminated for his riotous or disorderly
conduct or any other act of violence on his part, or
(ii) if the services of such employee have been terminated for any act which constitutes an
offence involving moral turpitude, provided that such offence is committed by him in the
course of his employment.
From India, Jamshedpur