Dear friends,
Eligibility to gratuity payment for those rendered short of 5 yrs "continuous service" was discussed in this forum repeatedly. Many estabilshments accepted & paid gratuity on the strength of Madras HC judgement concluding 4 yrs & 240 days in the 5th year will do the eligibility cretieria. Where as others raising doubts, will the Madras HC judgement suo motu apply rest of the states since there has been no clear amendment to the Act per se- "5 yrs" stipulation. This trend continues even when the Hon'ble SC also held that 4yrs + 240 days in the 5th for determining 'continuous service' meets the eligibility criteria in the case of "LALAPPA LINGAPPA & ORS V. LAXMI VISHNU TEXTILE MILLS LTD., SHOLAPUR [1981] RD-SC 29 (11 February 1981)".
I think it should suffice to say contents of this judgement is applicable not only the proper state of Maharashtra, from where the 'cause of action' arose but the entire nation as per the Constitution of India. Apart from this SC judgement one more SC judgement also is available upholding the 4 yrs+ 240 days norms for determining what makes a 'continuous service' which I quoted in this column a few years ago, will repost it shortly.
https://www.citehr.com/473683-gratui...ml#post2098224
https://www.citehr.com/440537-gratui...ml#post1993632
https://www.citehr.com/337506-can-gr...ml#post2162288
https://www.citehr.com/517210-gratui...ml#post2402006
https://www.citehr.com/440537-gratui...-10-a-pg2.html
https://www.citehr.com/440537-gratui...ml#post1993632
I may quote from the cited SC judgement exerpts reads as follows (it is lengthy to reproduce here but worth the space & time taken in order to remove the doubts still linkering):
...." The significance of this legislation lies in the acceptance of the principle of gratuity as a compulsory, statutory retiral benefit.
For a proper appreciation of the question involved, it is necessary to set out the relevant provisions of the Act.
Sub-section (1) of s. 4 reads as follows :
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 801 (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.
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.
The expression 'continuous service' has been defined in s.
2(c) of the Act in these terms :
2. (c) "continuous service" means uninterrupted service and includes service which is interrupted by sickness, accident, leave, lay-off, strike or a lock- out or cessation of work not due to any fault of the employee concerned, whether such uninterrupted or interrupted service was rendered before or after the commencement of this Act.
Explanation I.-In the case of an employee who is not in uninterrupted service for one year, he shall be deemed to be in continuous service if he has been actually employed by an employer during the twelve months immediately preceding the year for not less than- (i) 190 days, if employed below the ground in a mine, or (ii) 240 days, in any other case, except when he is employed in a seasonal establishment.
Explanation II.-An employee of a seasonal establishment shall be deemed to be in continuous service if he has actually worked for not less than seventy-five per cent of the number of days on which the establishment was in operation during the year.
The Act is a piece of social welfare legislation and deals with matters relating to payment of gratuity which, like pension, provident 802 fund etc., is a retiral benefit. Interrupted service by reason of sickness, leave, lay-off, strike, lock-out or cessation of work not due to any fault of the employee concerned should not be regarded as a break in continuity of his service. The inclusive part of the definition of 'continuous service' in s. 2(c) is to amplify the meaning of the expression by including interrupted service under certain contingencies which, but for such inclusion, would not fall within the ambit of the expression 'continuous service'. There were compelling reasons why the legislature gave an enlarged meaning to the expression 'continuous service' in s. 2(c) of the Act, so that the workers who have rendered long and meritorious service are not deprived of their right to gratuity by reason of absence from duty due to circumstances beyond their control.
The two Explanations have been inserted by the legislature to define the words 'one completed year of service' to benefit a class of employees who are not in uninterrupted service for one year. These Explanations employ a fiction which converts service of (a) 190 days, if employed below the ground in a mine, (b) 240 days, in any other case except when employed in a seasonal establishment, in a period of 12 calendar months, or (c) 75 per cent of the number of days which the seasonal establishment was in operation, to be one complete year.....
....In a case falling under Explanation I, an employee is deemed to be in continuous service if he has been actually employed for not less than 190 days if employed below the ground in a mine, or 240 days in any other case, except when he is employed in a seasonal establishment. In a case falling under Explanation II, an employee of a seasonal establishment, is deemed to be in continuous service if he has actually worked for not less than 75 per cent of the number of days on which the establishment was in operation during the year"...