Umakanthan53
Labour Law & Hr Consultant
Korgaonkar K A
Ba,llb,mpm,dir&pm,dll&lw,d.cyber
KK!HR
Management Consultancy
Anuj Trivedi
Hr & Admin
Kshashikumar Nair
Head - Hr/administration
Cms.sureshhr
Manager- Hr & Ir
Rajniverma
Hr Executive
Devashree N
Gm- Training & Hr
+5 Others

Thread Started by #keshav-prajapati

I've an question in my Mind about the gratuity that is, if a worker join my organisation on the date of 1st January, 2018 but he met an death on the date of 31st march, 2018. So in this condition will he eligible for the Gratuity amount..??
23rd May 2018 From India, Ahmedabad
Not at all . He has to work one year/ 240 days continuous service, than in a death case he would be eligible for Gratuity
23rd May 2018 From India, Madras
Gratuity is a statutory terminal benefit of employment available to an employee on his superannuation or retirement or resignation or on his death or disablement due to accident or disease for a blemishless and long duration of not less than 5 years of continuous service as per the provisions of sec.4 of the Payment of Gratuity Act,1972.. However, in the cases of death or disablement due to accident or disease, the first proviso to ss (1) of Sec.4 categorically states that the minimum qualifying service is not required and as such the implication in this regard is that the gratuity has to be calculated based on the actual service rendered by the employee on the date of his death or disablement as per the formula set down u/s 4(2) of the Act. The formula for computation of gratuity revolves around the factors of the no. of completed years of service and the last drawn wages only. Thus eligibility for gratuity generally arises from the nature of termination of employment whereas entitlement to gratuity arises particularly from the no. of completed years of service. In the given example, though the nature of termination of employment i.e., "death" while in service makes the employee "eligible" for gratuity, the actual service rendered by him being only 3 months i.e., less than a year in the establishment, strictly speaking, takes away his "entitlement" to gratuity. That's why the Central as well as various State Rules of Gratuity prescribes the submission of nomination form for gratuity by the employee who completes one year of service in the same establishment. If the poster's magnanimity compels him, he can treat the 3 months service as one year, compute the gratuity as per the formula and pay to the deceased's family with some ex-gratia.
23rd May 2018 From India, Salem
There are several organisations (many PSUs like BHEL) which have a voluntary welfare facility of giving three months salary in the event of death while in service before completion of five years service as gratuity. This is entirely within the discretion of employer to provide any such amount before completion of 240 days of service, as is in this case.
24th May 2018 From India, Mumbai
In continuation of the discussion on the trend indicated by Mr.KKHR, I am given to understand that the LIC has floated a special gratuity insurance policy with life cover till the date of retirement of the insured employees so as to enable to get full gratuity payable on the predetermined date of normal retirement though in the event of death of the insured employees any time before the date of actual retirement. Those members who have taken such a special gratuity insurance policy may kindly share the details for the benefit of others.
24th May 2018 From India, Salem
Dear Learned Members,
All discussion on Gratuity revolves around the issue whether an employee has served 5 years or not with the employer.
In current scenario, it is very common for an employee to switch jobs before the 5 year period. Over a career of 20 or more years, may employees may have switched many jobs thus denying him the benefit of gratuity with each individual employer. The employee ends up with no gratuity benefit even after working so many years.
Is there any mechanism whereby this accrued benefit can be transferred to the next employer so that at the end of an employees working life, he gets some benefit of a long career? Just Thinking aloud!
24th May 2018 From India, Kochi
I would like to comment on Mr. Umakantan's observation, you are correct regarding the LIC coverage. If the company has taken a LIC coverage for their gratuity fund, then the deceased employee's nominee in question would have got his gratuity amount till his actual date of retirement irrespective of number of years he has served in the organisation.
24th May 2018 From India, Mumbai
Further to the posts of Mr. Umakanthan & Mr. Shashikumar Nair, I would like to add that my organisation is presently in the process of renewal of LIC Group Gratuity Cash Accumulation Plan. In the renewal notice LIC has intimated that default quote will be generated based on:-
a) Upward revision of Gratuity from 10L to 20L.
b) Life Cover of Rs. 20L.
The company has following options for renewal:-
a) Reduce gratuity ceiling for LIC Policy below 20L with an undertaking that any shortfall in gratuity benefit will be fullfilled by the company.
b) Limit the Life cover to any desired amount less than 20L (again with a signed letter by the company)
From the post of Mr. Sashikumar Nair, I understand that the life cover is basically to ensure gratuity payout to the beneficiaries in case of death of the employee, even if he is not eligible for gratuity (less than 5years service). Am I right?
What will be the payout from LIC GGCA Plan in case the employee dies after serving more than 5 years (eligible for gratuity)? Will his nominee get the gratuity due to him as on the date of his death PLUS the life insurance cover? or will it be ONLY gratuity amount due to him as if he had retired on due date?
I have asked these clarifications from LIC but am yet to get a reply, I shall update this post as and when I get a reply. However, members may please advice based on their own experience.
Thanks
24th May 2018 From India, Kochi
Hi All,
Is Gratuity is applicable for Directors also?
N. Devashree
24th May 2018 From India, Pune
Mr. Arun -
The nominee of the deceased will get gratuity from his date of joining till the actual date of retirement. There will be no seperate LIC cover over and above the actual gratuity amount paid.
25th May 2018 From India, Mumbai
Sir,
As per provisions of payment of gratuity act, the liability of employer is limited to payment of gratuity for the period from the date of joining to date of death. But there is a chance to cover the liability from the date of joining to actual date of retirement by paying some extra premium.
N LOKANADHA BABU
25th May 2018 From India, Guntur
Gratuity is compulsory for those staff who has completed 5 yrs (240 days in a year) during his/ her tenure before this time he/ she is not eligible for gratuity. Staff who has completed only 3 months of his/ her service, he/ she is not eligible for the same.
26th May 2018 From India, Delhi
Dear Rajniverma,
You are requested to kindly read the query once again. You are also requested to kindly read the Section 4(1) of PoG Act which is given below verbatim and then give appropriate answer to the query.
Section 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:
27th May 2018 From India, Mumbai
Dear Friends,
Please go through my posts in below given link to understand how the gratuity Insurance Policy is important though the same is not made mandatory except in AP & Telangana.
https://www.citehr.com/445918-gratui...-accident.html
27th May 2018 From India, Mumbai
Dear Mr. Sashikumar,
When one takes a GGCP (Group Gratuity Cash Accumulation Plan) from LIC, it has two components
a) Gratuity Liability
b) Future Service Gratuity Liability (which, in their quote was mentioned as "Life Cover")
Essentially, LIC is covering their risk of having to pay 20L gratuity in case of death in service by providing a Life Cover of same amount and charging a premium from employer.
I have attached a pdf based on the quote received by us and my understanding of this Life Cover issue.
LICs use of the term "Life Cover" creates confusion.
regards,
Arun
28th May 2018 From India, Kochi

Attached Files
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File Type: pdf LIC GGCA - Life Cover.pdf (192.2 KB, 266 views)

#Anonymous
Dear Seniors,
Please confirm me if the employees will resign job after 2 years so he is applicable for Gratuity please revert to us also tell me in case of death.
2nd June 2018 From India, undefined
In case of death at least minimum 1 year service should be required. Same is applicable even in case of Gratuity Policy is taken from LIC. LIC will also pay as per Gratuity Act.
So in case death after 3 months of joining of service no eligibility arises for Gratuity.
3rd June 2018 From India, Lucknow
The qualifying service of 5 years is not required in case of termination of service due to death. But the person should have put in at least one year of service, otherwise, the calculation itself is not possible. However, I would suggest to calculate gratuity for the minimum period, i.e., one year in cases like the present one, as a good gesture.
4th June 2018 From India, Madras
Dear All seniors
As per my knowledge, Five years is not bounded as Accident case or death case. All condition remove in death cases.
5th June 2018 From India, Pune
Dear estimable s pls confirm can we made gratuity on last drawn basic salary or we would make it on last drawn net salary
11th June 2018 From India, Delhi
Gratuity is to be calculated on the aggregate of basic pay and DA.
12th June 2018 From India, Mumbai
Dear KK!HR,
I will appreciate if you give the section verbatim to the effect the gratuity is to be calculated on the aggregate of basic pay and DA.
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12th June 2018 From India, Mumbai
In case of death of employee with less than 1 year service,NOK will get 2 times Basic pay as gratuity.
12th June 2018 From India, Pune
Sir, Section 4(2) of the PGA states that employer shall pay gratuity at the rate of fifteen days' wages for every completed year of service. And Section 2 (s) defines wages to be ".... and includes dearness allowance but does not include ......"
12th June 2018 From India, Mumbai
Dear KK!HR,
I read the section 4(2) and Section 2(s) again and again this morning and found no where it is mentioned that the gratuity is to be calculated on the aggregate of basic pay and DA.
I am wondering now a days reading various posts not only on this site but elsewhere too as to really I am making mistake(s) in understanding the basic of Laws.
What is written in section 4(2) is reproduced hereunder:
"...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."
I feel the meaning of rate of wages last drawn is different than "aggregate" what you said.
Please correct me if I am wrong. In fact it is not appropriate on my part to cross a person like you who is Super Moderator. I am sorry for this.
12th June 2018 From India, Mumbai
Dear Shri Keshav,
Sec 2 of Payment of gratuity act defines wages
wages” means all emoluments which are earned by an employee while on duty or on leave in accordance with the terms and conditions of his employments and which are paid or are payable to him in cash and includes dearness allowance but does not include any bonus, commission, house rent allowance, overtime wages and any other allowance.
Gratuity calculators available on the internet work out Gratuity like in this link
Gratuity Formula for Calculation of Gratuity Amount in India
But many of the other calculators take Basic pay +DA as the base for working out.
12th June 2018 From India, Pune
Dear Nathrao ji,
The calculation given in the link is absolutely correct. (But I don't rely on any link or google search).
In the link it is clearly mentioned that Last drawn wages which I am also saying. The last drawn is not arrived by "aggregate". And the word "aggregate" is very vague which doesn't define the period for aggregation.
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12th June 2018 From India, Mumbai
Dear Mr Keshav,
Thanks for the clarification.
I also do not rely on Google search, but on search and reading of original enactments and court rulings.
12th June 2018 From India, Pune
Dear All,
As per Section 4 (1) , Gratuity is a gift to an employee by an employer for rendering continuous service of not less than five years and he will get this gratuity after the completion of services viz.. resignation, retirement superannuation, death and disablement.
but in case of death and disablement this provision of continuous service is not applicable. employee is entitled for Gratuity.
16th June 2018 From India, Jaipur
Dear All,
The Calculation of Gratuity under the Act that is -Basic +DA/26 days x no of service days/years.
All Allowances except house rent allowance the part of basic wage if the allowance earned by all paid by all employees while on duty, leave,holiday and on rest day.
Prithvi Singh Yadav
CEO
Newerahr Management consultancy GGN(HR)
28th June 2018 From India, New Delhi
Hi,
In death cases, If employee has worked in company at-least above 180 day, his/her nominee is eligible to claim for gratuity.
2nd July 2018 From India, Bangalore
Dear Vikas.R,
Can you please produce the relevant section or any other valid documentary proof to suffice your say?
It may be your interpretation. I am not saying it is wrong. While calculating of gratuity we ignore the year if an employee has worked less than 6 months and in case of 6 months and above we consider full year.
If this logic is applied then working for less than 180 days i.e. 6 months, we can ignore the gratuity. But how much you will save for your company?
2nd July 2018 From India, Mumbai
In this case, he might be paid considering 3 months service as one year with some ex-gratia to help the deceased family upto some extent.
11th July 2018 From India, Varanasi
Hi,
There is not any hard and fast rule that gratuity shall be payable after 6 months in death case. But in most of companies after 6 months duration is counted for eligibility for payment of gratuity.
Gratuity Death case eligiblity is totally based on company or gratuity provider management discretion to count for payment for less than 6 months service duration employee.
13th July 2018 From India, Bangalore
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