Confused About Gratuity Eligibility? Does 4 Years Plus 240 Days Count?

In furtherance of clarification on gratuity calculation, I would like to know about the issue relating to the minimum qualifying service, which is 5 years.

There are divergent views on the issue. According to one school of thought, if the employee has completed 4 years of service and worked 240 days in the 5th year, he will become eligible for gratuity. Another school of thought says that one needs to complete 5 years of continuous service, and only then will he be eligible for gratuity. The rounding-off concept will apply only after the completion of 5 years of continuous service.

Can anybody guide me on this issue?

Thanks & regards,
Prakash K

Dear Prakash,

Without completing 4 years and 12 months, one cannot avail their gratuity claim.

Best wishes,
R Shanti

Dear Prakash,

R. Shanti is correct; after completing 5 years of continuous service, an employee may be eligible for Gratuity.

Naah...

There are two aspects to it. One is policy making, valuation of liability for accounting purposes, and creating reserves. The other is actual payments. So when your company is drafting policy and doing the finance task, you account for completion of 5 years of service only. When there is a claim, follow the below-mentioned rules:

Law
1. Completion of 5 years of service
2. Completion of 4 years and 240 days of service in the last year is also accepted as rounding-off law
3. Madras High Court Judgment: 240 days can also include Sundays and other national holidays as they are unavoidable, and hence 240 days can also be read as 4 years and 8 months.

Advice
If there is a case where an employee has completed 4 years and 20 days/8 months of service, pay him the gratuity. (If he turns to the law, Jail is up to 3 years with a financial penalty), apart from disgrace to the employer. If you still have doubts, consult your legal team.