Dear Abhay,
Gratuity accrues to an employee from the date of his joining your organization irrespective of his confirmation date and is payable within 30 days from the date it becomes payable.
The management has its prerogative of releasing / short-changing an employee any time it deems fit during the notice period. However, it is obligated to pay his "full salary + benefits (+ perks, if any) for the full notice period since as per the terms & conditions of his employment, he has shown his willingness to serve the Company for the one month's notice period. Law, strictly speaking, will view him to be working during his notice period.
The only exception will be in case the employer can justify the short-change in notice period and immediate relieving on some genuine & adequate reasons showing that his continuance is detrimental and will hinder business (usually difficult to prove unless blatant)
As regards Gratuity eligibility, he will be better served in completing 5 years of continuous service as under the Act. If he is forced to leave by an immediate relieving, on paper he is not eligible for Gratuity. However, law will view it otherwise in case of a litigation given that he was forced to exit and his Gratuity stands payable.
In simple words, if he goes for a litigation, he may be restored his Gratuity if malafide intentions of the employer are established. If not, the employer may get away. This is indeed a tricky technical issue.
Legally, given the circumstances, it may be held that a forced-resignation/forced early cessation of service without good reasons will tantamount to it being retrenchment of sorts and, therefore, it is immaterial that the termination is ocassioned by the need to discharge surplus manpower.
It has been held by the Supreme Court that retrenchment of employees will fall within the scope of Section 4(1) of the Payment of Gratuity Act and a retrenched employee will be entitled to Gratuity in such a borderline case.
Generally, however, it has been established that an employee satisfying conditions of length of service and salary limit will be entitled to gratuity even if he is resigning from service as also confirmed by the Delhi High Court (Texmaco Ltd. vs Ram Dhan 1992 LLR 369 (Del HC). Gratuity payable cannot even be stalled under SICA or financial difficulties of the employer.
Do note that the Madras HC has held that an employee rendering continuous service for a period of 240 days in a year. i.e. the 5th year subsequent to first 4 years should be deemed to have completed continuous service of 5 years and is entitled to Gratuity. By this analogy, your this employee is eligible for Gratuity. The Madras HC also distinguished the earlier ruling of Andhra Pradesh High Court wherein it was held that an employee who has worked for 4 years and 11 months and 10 days having not completed five years of service will not be entitled to Gratuity (Mettur Bearsell Ltd (represented by its Personnel Manager, Madras vs Regional Labour Commissioner (Central Authority under the Payment of Gratuity Act, 1972), Madras, 1998 LLR 1072 (Mad HC)
Given the argument, it will be prudent to pay Gratuity to this employee.
Rahul
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Eligibility for Gratuity Payment
One of Employee joined our organization on 1st April 2004 on probation and Confirmed on 1st Oct.2005, now he is given resignation letter on 1st March 2009 with mentioned consider his one month notice period as per terms & condition of appointment letter. The same resignation letter is accepted by management and relieved him with immediate effect ie.on 2nd March 2009.
In his Appointment letter mentioned clause : - On confirmation, your services can be terminated by one month’s notice or wages/salary in lieu of notice. Similarly, you can relinquish your services by giving one month’s notice in writing or one month’s wages/salary in lieu of notice.
Till date we have not prepare his full and final dues. My question is that whether he is eligible for Gratuity Payment?
Kindly give your suggestion Please.
Regards
Abhay