Gratuity Eligibility: Can My Company Deny It If I Haven't Completed 5 Full Years?

I am working in a company in Mumbai and have completed 4 years and 304 days of continuous service in this company. I have resigned and am serving the notice period. Can the company refuse to give my Gratuity as I have not completed the full 5 years (356 days of service in the 5th year)?

Dear Company,

The company may refuse to grant you gratuity as you have not completed 5 years of service.

Regards,
J. S. Malik

Dear Sam,

Greetings!

The below content is posted by Mr. Michael Nicholas. I hope it will clear your doubts.

What is a year of service under the Gratuity Act?
An year of service means, for the purpose of calculating gratuity, the individual should have worked for 240 days in that calendar year. For instance, an employee had worked for over 7 years, and the number of days worked in each year are as follows:

Assuming the total number of days per year is 303 days:
1st year: 300 days
2nd year: 255 days
3rd year: 298 days
4th year: 129 days
5th year: 310 days
6th year: 110 days
7th year: 303 days

Now, the employee is eligible for five years since he has not completed 240 days, which is the eligible criteria for two years. However, typically, 99.99% of companies do not follow this.

The application of the Act is extended to those who have completed 4 years and 240 days in the fifth year. For calculation purposes, the gratuity is calculated in multiples of 6 months. For example, if an employee completes 6.7 years, the gratuity is to be calculated for 7 years.

I hope I have made it clear. (Source: https://www.citehr.com/90519-gratuit...-240-days.html)

Regards,
Michael Nicholas

Samsational, I am in the same boat. I have completed 4 years and 10 months, including the notice period. I am not sure if the company will pay me gratuity. Please let me know if you receive the gratuity.

Dear [Recipient],

You are eligible to receive gratuity even if you have worked for 4 years and 11 months. The Madras High Court, in the case of Mettur Beard Sell Ltd versus RLC, has made a decision regarding this particular issue. It was determined that any employee who completes 240 days of service in a year during the 5th year will be considered to have continued in service for one year as stipulated by section 2(a) of the Payment of Gratuity Act. Furthermore, it was ruled that an employee who has served for 10 months and 18 days in the 5th year following the initial 4 years should be considered to have completed a continuous service of 5 years and is entitled to gratuity.

The case reference is 1998 LLR 1072 (Mad H.C.).

Should you require a copy of the judgment, I can arrange to provide the same and upload it to this thread.

Regards

Dear,

You will get the gratuity, but the company may refuse to give it as you have not completed 5 years and you may have to go to court. However, you can refer to the Madras High Court decision to your company and fight a case against your company if they deny it.

Best Regards,
Sajid Ansari
Delhi

Thanks for your offer of assistance. I will ask for the judgment copy if the company refuses to give the gratuity. Also, thanks to all others for their valuable comments.

Hi,

As per rules, any employee needs to complete 5 years of service to be eligible for gratuity. Therefore, the company has all the rights not to pay you the gratuity if you leave the company before completing 5 years, even if it is shorter by 1 day.

Hi,

As per the rules, any employee needs to complete 5 years of service to be eligible for gratuity. Therefore, the company has all the rights not to pay you the gratuity if you leave the company before completing 5 years, even if it is shorter by 1 day.

Dear Sir,

The organization may deny providing the gratuity as you have not completed 5 years of service. However, a fraction of a month can be rounded off to a month. Therefore, it can be assumed that you have completed 5 years of service. The law will be in your favor, not in favor of the employer. Even if you have completed 4 years and 7 months, that too can be considered as 5 years since the higher fraction of the year can be rounded up or down depending on the fraction. If it is a higher fraction, it can be rounded to the next higher. Being just short of 10 days will not disqualify you.

Best regards,
P. Sathish Kumar

Dear Samsational,

If you have worked for more than 4 years and 240 days, then you are very much entitled to your gratuity. This is because for gratuity calculation, a full year is considered based on 240 days, not on 365 days. To my knowledge, there is a judgment on this matter by the Madras High Court. If you have access to the current Labour Report or can contact a reputable consultant who can provide you with the same judgment, you can proceed to claim your gratuity.

Vinay