Gratuity Eligibility: Can You Claim It After 4 Years and 4 Months of Service?

Dear All,

As per the Gratuity Act, an employee is eligible to receive the gratuity amount only after completing 5 years of continuous service in the organization. However, if an employee has completed 4 years, 4 months, and 17 days and is leaving the company, is he eligible for gratuity?

How do we calculate the amount?

Hi Pooja,

He is not eligible for gratuity if the person has been working for 4 years, 11 months, and 30 days. The person has to complete 5 years of service with the organization to be eligible for gratuity.

With regards,
Ramesh.V

Hello Members,

Should all organizations be required to amend gratuity, or is it optional? Kindly clarify.

Sense

Hey Pooja!

Though as per the Gratuity Act, one should complete 5 years of continuous service; if one has completed 4 years & 240 days, he/she is eligible for gratuity.

Formula for gratuity calculation: Basic*15/26* number of years e.g.:
Basic = Rs. 10,000/-
Number of years = 15 years Gratuity = 10,000*15/26*5
= Rs. 28,846.15/-

Dear Friends,

I think Pravinaa is right. The only thing I wanted to get clarified is that in the fifth year, 240 days of service should be completed, according to me. Friends, can any one of you clarify this for me?

I have also attached an Excel file containing samples of Gratuity calculations. I hope it will be of some use to all of you.

Thanks & Regards,
Amith R.

Hi Parveena,

If you said that the formula for gratuity calculation is as given below, then why in the example you have taken the number of years as 5 instead of 15?

Basic*15/26* number of years

For example: Basic = Rs. 10,000/- Number of years = 15 years Gratuity = 10,000*15/26*5 = Rs. 28,846.15/-

Employee has to complete 5 years of service, then only he/she will be eligible for gratuity. 4 years and 4 months are not applicable.

Hi,

As per the Payment of Gratuity Act, an employee must serve 5 years or more to become eligible for gratuity either on resignation or termination.

Regards,
Om Prakash

In the Gratuity Act, does continuous service also include the leave taken by the employee? I mean if an employee completes its 5 years but during this period, he takes let's say 40 or 50 leaves, then is he liable for the gratuity? Please tell me if someone knows this.

Dear Friends,

I have a doubt regarding the subject mentioned above. If an employee has completed 5 years of service but, for example, in the 2nd year, he worked less than 240 days continuously, will he be eligible for gratuity for 5 years or 4 years?

Could you please provide clarification on this matter?

Thank you,
Gajraj

Hi Pooja,

Can you clarify for me about the gratuity? Is it paid by the employer, or have you arranged for it through LIC? If the employer is paying the gratuity, then based on the number of working days and years you mentioned, the person may not be eligible. However, if the gratuity amount for the said person is deducted from their salary and then transferred to LIC, then that person is entitled to receive the total gratuity amount deposited in the LIC office.

I hope this clears up your doubts.

With regards,
Satya Penubothu

The gratuity is payable only when an employee completes 5 years of continuous service with one employer. If the period of service is less than 5 years, the employer is not bound to pay gratuity.

Ninad Sirdesai

Dear All,

As per the Gratuity Act, an employee is eligible to receive the gratuity amount only after completing 5 years of continuous service in the organization. However, if an employee completes 4 years, 4 months, and 17 days and then leaves the company, is he eligible for gratuity? How would we calculate the amount?

The Gratuity is payable only when an employee completes 5 years of continuous service with one employer. If the period of service is less than 5 years, the employer is not bound to pay gratuity.

Ninad Sirdesai

Hi Praveena and Amith,

You are totally right. It is mandatory to complete 5 years of continuous service in the same organization without a break to be eligible for gratuity.

Shahida R.
HR Manager.

Hi Pooja,

This is Maharana from Mumbai. As per the discussion regarding the gratuity for the last year of service, if the employee has completed more than 6 months, it will be treated as a full year for the purpose of gratuity as per the act.

Regards,

R. M. Maharana

Pravina has given the correct answer. As per this, the person who has completed 4 years, 4 months, and 17 days in their employment is not entitled to gratuity.

S. K. Moudgal
9311689205

Dear Amith,

There is a judgment from the court. If an employee completes 240 days in the 5th year, he shall be eligible.

Regards,
Mukesh Sachdeva

Re:

Dear Disha Bansal,

First of all, my name is Pravina, not Parveena. Please take care of this!

Please understand it was a mistake when I wrote 15 years there. Anyways, you can make the corrections to check this out. For example, instead of 5 years, take 15 years and make the same changes in the formula as given below:

e.g.: Basic = Rs. 10,000/-
No. of years = 5 years / 15 years
Gratuity = 10,000 * 15 / 26 * 5 / 10,000 * 15 / 26 * 15
= Rs. 28,846.15/- = Rs. 86,538.45/-

See, it was so simple.

I think one should have this level of understanding before asking questions like this.

Bye, no problem.

Hi Pravina,

If you said that the formula for gratuity calculation is as given below, then why in the example did you take the number of years as 5 instead of 15?

Basic * 15 / 26 * number of years
e.g.: Basic = Rs. 10,000/-
Number of years = 5 years
Gratuity = 10,000 * 15 / 26 * 5
= Rs. 28,846.15/-

Dear Friends,

In my opinion, we are creating confusion among our friends regarding the subject. According to the Act, an employee must complete 5 years of service in any organization to be eligible for Gratuity. Additionally, as per the Act, the employee should work a minimum of 240 days in a calendar year; otherwise, they will not receive Gratuity for that specific year. For example, an employee:

1st year - worked 280 days
2nd year - worked 280 days
3rd year - worked 240 days
4th year - worked 210 days
5th year - worked 250 days

The employee is eligible for Gratuity, but as per the Act, the specific 4th year (where the employee worked below 240 days) will not be considered for payment. However, companies usually consider all the years of service rendered since this is a retirement benefit.

I believe I am not mistaken. I recommend all friends to provide examples to share their views, which will enhance awareness and knowledge.

Regards,
PS

Dear Friends,

In my opinion, we are causing confusion among our friends on this subject. According to the Act, an employee should complete 5 years of service in any organization to be eligible for Gratuity. Additionally, according to the Act, the employee must work a minimum of 240 days in a calendar year; otherwise, they will not receive Gratuity for that specific year. For example, an employee:

1st year - worked 280 days
2nd year - worked 280 days
3rd year - worked 240 days
4th year - worked 210 days
5th year - worked 250 days

The employee is eligible for Gratuity, but as per the Act, they will not receive the specific amount for the 4th year. However, companies generally consider all the years the employee has rendered service since this is a retirement benefit.

Regards,
PS

Dear friends,

I would like to know more about job evaluation. It's very important for my exam point of view. Please help. :icon1:

Dear Pooja,

A man is entitled to gratuity only after serving 5 years of continuous service in the organization (exception - death case).

Regards,
SWETA