As already pointed out, even when the Madras High Court view was in existence many authorities under the Payment of Gratuity Act had refused to grant gratuity saying that there is no Supreme Court view on this and since the Act makes it very clear that completion of 5 years is mandatory for being eligible for gratuity, an employee who has not completed 5 years but has a service of 240 days in the fifth year is not eligible to get gratuity. When the Kerala High Court verdict came, the same was again opened and the appropriate authorities in Kerala started ordering payment of gratuity to persons who have not completed 5 years of service but have had 4 years and 240 days of service.
The issue of retrenchment compensation is different. In order to be eligible to get retrenchment compensation, just a service of one year is sufficient. In the case of gratuity, it is not one year but 5 years. It is true that 240 days of service constitutes one year under both the Act. It is so in the case of eligibility for leave under Factories Act and Plantations Labour Act.
For eligibility of gratuity one should have worked for not less than 5 years continuously with each year having at least 240 days (paid days). If you have worked for more than 5 years, say, 8 years but in between there are, say, four years with service of less than 240 days, the employee will not get gratuity. In this context we should also consider that if the employee has not "worked" for 240 days but was "employed" for 240 days, he will get gratuity. And if an employee "employed", has remained absent without leave and as a result of his absence, he could not work for 240 days, then he will not get gratuity. These equations are true in the case of temporary workers who are not "employed" continuously on the rolls of the employer but are called or engaged to "work" whenever required.
Therefore, the first qualifying parameter is 5 years of service and the second thing is that each year should have 240 days pay days. When the first milestone is not reached, naturally, he will disqualify from gratuity. At the same time, Madras High Court and Kerala High Court, having interpreted the Gratuity Act to make it available to persons who were not employed for 5 years but were employed for 4 years and 240 days in the 5th year, we can also follow it. But, if your employer rejects saying that you have not completed 5 years and then the Appropriate authority, ie, the Labour Officer, supports it, you will have no other choice but to prefer a complaint interpreting the law as above and quoting the above two verdicts.
Madhu T K