Industrial Corporate Practical Training Institute
Korgaonkar K A
Manager- Hr & Admin
+2 Others

I am working in private software firm since 5 years, in India.
Recently, my company owner suggested me to get separate from company.
As, I have completed 5 years in company, Whether I am eligible for gratuity criteria ?
Right now, My Company have total 10 employees including me.
If company remove some employees in future, still Company is suppose to pay my gratuity ?
How gratuity is calculated ?
(My Basic salary in 15000 but there is no DA mentioned. )
6th November 2014 From India, Pune
As per the Payment Gratuity Act, you are entitle to get Gratuity if you have completed 5 years of the service irrespective of the reason of leaving- resignation, death, termination, transfer to another company
Yes, as per Gratuity Act and AS 15 of ICAI, company is liable to pay Gratuity
calculation will be as follows
Last monthly basic salary/ 26 X 15 X no. of years of service completed
DA is applicable only if mentioned
In your case, it will be 15000/26 X 15 X 5
You are eligible for Gratuity amount of Rs. 43269.00
6th November 2014 From India, Mumbai
Dear Govind ji,
Thank you for your reply. Your reply is correct. But you did not mention about the applicability of POG to any establishment. No doubt, in the article it is mentioned that the Act is applicable where 10 or more persons are working.
With due respect to you I would like to have clarification from you on your following quote.
"AS 15 of ICAI" means "Accounting Standard 15 of The Institute of Chartered Accountants of India". AS 15 is pertaining to employee benefits which includes many other benefits such as Medical Care, Insurance, Profit Sharing, Leave including sabbatical leave and many more, to my knowledge.
Do you mean to say that all such benefits are mandatory since written in AS 15?
6th November 2014 From India, Mumbai
Please find following clarity
This Act is applicable to all states (except Jammu and Kashmir) and particularly to every factory,
mine, oilfield, plantation, port, Railways Company. It is also applicable to every shop or
establishment in which ten or more employees are/ were employed on any day during the preceding
12 months. The Act continues to be applicable to any establishment or institution even if the number
falls below 10 subsequent to its coverage. Central Government may by notification extend the
coverage to any establishment/institution.
In your case, even if your company's employee becomes less than 10 once the payment of gratuity is liable, they have to pay even the number goes below 10.
6th November 2014 From India, Mumbai
Dear Nilesh,
In case of termination, it may depend on the Certified standing orders of the company.
The payment of Gratuity may be forfeited as per the Standing Orders of the Company.
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6th November 2014 From India, Mumbai
A standing order cannot violate Payment of Gratuity Act, please correct if I am wrong

6th November 2014 From India, Mumbai
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8th November 2014 From India, Mumbai
Dear Seniors
please clear following points.
1. if any employee has died before completed of 5 years service then will he eligible for gratuity. how many days service is required for entitlement of gratuity.
2. Gratuity calculation will be only on basis salary or Basis+DA?.
11th November 2014 From India, Dehra Dun
Yes, in case of death, a person is entitled for Gratuity. Even if he has not completed 5 years service.
If person is alive, minimum 5 years continuous service is required.
If DA is part of the salary then basic + DA otherwise basic only.
11th November 2014 From India, Mumbai
Thanks for reply Govind Sir
but my Question was how many days service is required for gratuity in case of death.
suppose that an employees has joined 01 October 2014 and suddenly he has died dated on 08 November 2014. is he entitled for gratuity.
please clarify.
13th November 2014 From India, Dehra Dun
Please read it carefully, response is already there.
There is no minimum days service required for payment of Gratuity in case of death, Minimum 5 years continuous service required only in case of, if the employee is alive and terminated the services from either end for whatsoever reason
13th November 2014 From India, Mumbai
Dear Seniors

as mention link in one of the above post, please out your views on the following query.

Q.1 Why it is good to have Gratuity Insurance.

Ans. Gratuity is payable only in case employee completes minimum 5 years of service. However in case of death of an employee, the rule of completing 5 years is not applicable. This means the Gratuity is payable. The sum payable is very high. Ideally the wages for death or permanent disability should be considered on the basis of average increase in basic salary per year. Here, we will take example on last earning basic salary. We will again take same example of 17000 as a basic salary.

Employee's date of Birth: 01.01.1988

Current monthly basic salary: 17000

Date of appointment: 01.01.2010

Retirement age as per appointment letter : 58 years

Current age: 25 years

Date of death of the employee: 30.11.2012

Total no. of years of service left: 58-25 = 33

Gratuity payable: 17000/26 X 15 X 33= 323654

here is my question is:- if any employee has died during working the will he eligible as mention above calculation.

please noted the age factor and calculation.

kindly share your valuable reply.
14th November 2014 From India, Dehra Dun
Hii Nilesh,
I would like to throw some light on your situation,
Payment of Gratutity,1972 says that it is applicable,
to any establishment in which 10 or more person are employed,
the employee has rendered a serevice of 5 years and is paid after Termination.
These both condition are valid in your situation.
But the law also mentions " Forfeitation of Gratutiy" which says that the gratuity can be forfeited by the employer wholely or partially if the service is terminated.
Gratuity is calculated at the rate of 15 days wages for every completed year. ( wages means the last drawn rate of wages). so you can calculate you gratuity using it.
I hope it will help
16th November 2014 From India, Pune
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