Am I Eligible for Gratuity After Resigning from a 5-Day Workweek Job?

Dear All,

I am seeking your assistance. I have been employed by a firm since 7th Feb 2011 and I am considering resigning. I have a query regarding gratuity. Could you please advise if I am eligible for gratuity? Our company operates under the Shops and Establishment Act and follows a 5-day workweek. Our gratuity fund is managed by LIC.

Thank you in advance.

Yes, you will get gratuity after completing five years of service if your establishment has ten or more persons employed.

Thank you.

Hi Varsha Nagpal,

You are indeed eligible for gratuity provided you complete 5 years of continuous service, which means 240 days in each completed year.

With Regards,
Mr. Thumbs Up

Yes, you are eligible for gratuity after completing five years of service if your establishment has ten or more employees.

Kumaroraveen,

It is not 240 days for an establishment working for five days a week. For them, it is 190 days only to complete one year of service.

Dear All,

I just wanted to ask you all that my company is a manufacturing unit, and my company does not provide any benefits. My organization is registered under the Factories Act and the Standing Orders Act. I've been working here for the last 5 years in this organization. Now I want to resign, so what all benefits can I claim at the time of resigning? I want to claim all the benefits which I did not receive during my working tenure.

Please suggest.

Warm regards,
Irvin Preet Narula

Please refer to the Shop Act of your state. Many are not aware that employees covered under the Shops Act have to refer to the clauses of the Shops Act of the concerned state. In the AP Shops Act, it is clearly mentioned that gratuity is payable upon completion of 5 years. However, it may be noted that employees leaving even after completion of 1 or 2 years are also eligible but under a different head, i.e., "SERVICE COMPENSATION." This amount is also calculated like gratuity but payable to employees even after completion of 1 year. For this, please refer to the Shops Act of the concerned state. I have claimed this amount while in Hyderabad.

Regards,

Recently, the AP Shops & Establishment Act was amended. The service compensation does not take into consideration those who have completed 1 or 2 years of service.

You will complete the mandatory 5-year period on 6th February 2016. You will be eligible for gratuity if you resign on or after 6th February 2016, provided you have worked for a minimum of 190 days during each year (365-day period).

I have not gone into detail regarding the AP Shops and Commercial Establishments Act, and that is why I have this doubt. You have said that any employee leaving the service after 1 year will be entitled to service compensation. Is it so, or is it that any person whose service is RETRENCHED is entitled to receive this compensation calculated at the rate of 15 days' pay for every completed year of service? The latter is similar to the retrenchment compensation as per the Industrial Disputes Act, but the former is a clause that obliges the employer to pay this amount even if the employee resigns and leaves.

Regards,
Madhu.T.K

Recent Judgment on Gratuity Eligibility

In a very recent judgment, the Kerala High Court has ruled that to be eligible for gratuity, 4 years and 240 days in the fifth year are sufficient. The judgment in Sreeja Vs Regional Joint Labour Commissioner (2015 LLR 826) considered the precedence set by the Madras High Court ruling in Mettur Beardsell Ltd Vs Regional Labour Commissioner (1998 LLR 1072). In this case, the court held that continuous service means 240 days in a period of 12 months and that for entitlement to gratuity, five years of minimum service is not required. An employee who has rendered 240 days in the fifth year is deemed to have completed the fifth year and qualifies for gratuity. Since this was a High Court judgment, many states (including Kerala) had not considered it as binding to their respective states.

In the case of establishments working for less than six days a week, the qualifying days for continuous service are obviously 190 days. This includes all paid days, such as holidays, weekly off days, paid leave days, and layoff days, if any.

Regards,
Madhu.T.K

If the High Court ruling is that it is enough for an employee to work for 4 years and 240 days, then the Gratuity Act has to be amended accordingly. Unfortunately, the ruling of the High Court is, in my opinion, not in accordance with the law of the land. It is the result of a total misinterpretation on the part of the High Court. I guess I might be hauled up in court for that!!

Hi all,

I have completed 190 days in my 5th year as per the Gratuity Act, and my company is a 5-day working company. The Gratuity Act states that if it's a 5-day working company, then upon completing 190 calendar days, you become eligible for gratuity.

Warm Regards,
Varsha