Dear All, I have a query in calculation of Gratuity.
If an employee has joined the company on 01/07/2012 and his last working day is 19/01/2019.
Will we consider his tenure as 6 years or 7 years as he has completed 6 years & 6 months and 18 days. Pls let me know. Thanks.
His service is 7 years for Gratuity calculation.
For gratuity calculation you have to consider 7 years.
Your have to consider him for 7 years only.
Thanks everyone for your valuable inputs. Will take his tenure as 7 years for Gratuity calculation.
Pl.note sub section 2 of Sec.4 of the Act in this respect:
"Payment of Gratuity Act, 1972
xxx
Section: 4
Payment of gratuity.
(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: 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 such nominees 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: "xxxx
Hi,
6 years & 6 months and 18 days - In this case employee is eligible for 6 years only and not 7 years.
If the employee completed 6 years and 240 days (which is 8 months) then it can considered as 7 years.
Mr. V M Lakshminarayanan, with all respect to you and your position as a Sr.Manager (HR) let me ask one question, have you read the Payment of Gratuity Act? If yes, please read section 4(2) of the Act once more and if not read,please do not comment without reading the Act.
I apologise everyone in this forum if I have been very harsh; sorry I feel bad when a person holding a Senior position in HR interprets law incorrectly and gives wrong advises.
Mr.Madhu,
It is as per verdict of Chennai High Court for wp no 2135 of 1987.
1998 LLR 1072
MADRAS mGa COURT
Hon~ble Mr. S.M. Abdul Wahab~ J.
W.P. No. 21350f1987
Decided on 12.6.1996
MetturBeardseU Ltd. (represented by Its
Personnel Manager), Madras
vs.
Regional Labour Commissioner (Central)
:0 (Authority under Payment of Gratuity Act).
1. Madras & Others
PAYMENT OF GRATUITY ACT~ 1972-
Sections 2(a), 2(b), 2(c), 2(e) and 2A -
'Continuous serVice' - Qualifying pe-
riod of service by an employee -En-
titlement of Gratuity - An employee
rendering continuous service for a pe-
riod of 240 days in a year will be
deemed to have continued in service
for 'one year as stipulated by section 2A
of the Act - Thus an employee who has
P.ut in service for 10 months and 18
days for the fifth year subsequent to
first 4 years should be deemed to have
completed continuous s6rvice of five
years - His claim for gratuity is tenable
Dear friend,
Pl.read the sub section once AGAIN. I extracted here the relevant sec.for you to read, without any ambiguity or interpretation, the act clearly/plainly states ..."every completed year of service or PART THEREOF IN EXCESS OF SIX MONTHS...." Your query addresses only for the 'fraction of 6 months & 18 days' is it not "part thereof in excess of six months?"
I fail to understand what's your confusion in this friend?
The Mettur ..case quoted by you is relevant to those falling short of full 5 yrs of continuous service. Whereas your query already shows crossed the qualifying service which is above 6 yrs.+6mths+18 days.
Keep cool and think again.
----------
Payment of Gratuity Act, 1972
xxx
Section: 4
Payment of gratuity.
(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
I hope Kumar has given the clarifications. I am afraid if there is any HR fraternity who does not know Mettur Bearsell's case on Gratuity but you are quoting it as if it is a new input. As said by Kumar, the case in reference is all about interpreting continuous service and to decide whether an employee who has not completed 5 years but has worked for 240 days in the fifth year would be eligible for gratuity. It has nothing to do with " treatment of fraction of service over 6 months"
If person has completed 4 years and 10 months is He/She is eligible for gratuity.
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