Gratuity Before 5 Years Of Completion - CiteHR
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Iam Manivel working for an MNC Company in Bangalore for the past 4 years and 8 months. I will be resigning my post in another 2 months time.
So i will be completing only 4 years and 10months in this company by the time i get relieved.
So will i be eligible for the Gratuity??
Pl clarify
Thanks & Regards,
Manivel Natarajan.
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Dear Manivel Natarajan


Is it necessary that an employee must have worked for five years in order to claim gratuity under the Payment of Gratuity Act?

Yes. The minimum period for becoming eligible for payment of gratuity is continuous service of not less than five years and hence it should be complete five years. The words 'or part in excess of six months' are only meant for the purpose of computation of gratuity. Where in one case, the employee has worked for 4 years 11 months and 10 days, it has been held by the Andhra Pradesh High Court that he will not be eligible for gratuity for want of completion of five years.

Reference :

P. Raghavulu & Son VS. Addl. Labour Court Andhra Pradesh, Hyderabad and another, 1985-1 LLN 612.

source :The Payment Of Gratuity Act, 1972: Expects clarifications with Case Laws reference

KVJ Raghunath

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Dear KVJ Raghunath,
Thanks for your important comments. I was also confused about this 5 years contineous service condition. It will be very helpful for us if you send us this judgement of High court.
Suresh Adav
It depnds on two things 1. What is the period specified in your offer letter (some companies pay gratuity even after completing 1 year) and 2. Some companies do pay gratuity even if the employee has completed more than 4 years and 6 months. So it's better to check with your organization about the policy. If you are leaving on good terms you have chance of getting the gratuity.
But i think you are eligible for gratuity, if a person completes 4 yrs and 240 days than he is eligible for gratuity coz The factories Act considers 240 working days equal to one year means in a year you are require to work 240 days in that view if any employees completes 4 yrs. and 240 days in current year than he gets Gratuity. This amendment has been done by Madras High Court and effective in the year 2005.
Rajiv Singh
it is depend up on company are logical right about period of service.that 4 yrs. & 8 months eligibility .
the law clearly stipulates the condition under which geatuity is payable to an employee who quite before the gratuity period of 5 yrs.
gratuity is one type of reward it nature,is meant to reward system provided it is given for minimum period of time.
If you are leaving on good terms you have chance of getting the gratuity from your organization.
Dear Manivel
The very important point is missed out here. As per section 4 (1) of The Payment of Gratuity Act, 1972, the completion of five years of continuous service is must. It cannot be reduced for anything less than five years. The Section 4 (2) of the Act, make it necessary to round up the completed months more than 6 months to one year. This cluase or section is related to the calculation only and not the eligibility. For Example - If you complete 5 years and 7 months of service then in such case the gratuity will be calculated for 6 years. However, law does not provide any concession for the eligibility criteria of completion of 5 years. I do not deny that the Compnay out of good relation with employee can pay Gratuity even if worked for 2 to 3 months less than 5 years. However, in such case it is the employer's choice and goodwill and not the employee's legal right to claim it.
Since we are taling about gratuity here, I have a question of my own.
I will complete 5 years on 31st May 2011 in my current organisation, and my salary is credited on 25th of every month. If I resign on 1st June 2011, will i be eligible for gratuity?
Is employees’s dependent are eligible to get Gratuity, in case if employee death though he/she has not completed mandatory 5 years of job with the company.
Yes. In case of death of an employee and also in case of disablement due to accident, the Gratuity is payble to the employee’s dependent.

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