Am I Entitled to Gratuity After Working Abroad for a Year? Seeking Clarity on Eligibility and Amount

I am working in an IT company. I completed a total of 5 years with this firm. In these 5 years, I was 1 year in the USA on an L1 visa. I transferred to the USA for a short time period and was reporting to India during that one-year period. My question is whether I am still eligible for gratuity. I was on the USA payroll during that 1-year time period. Thank you for replying.

Let me clarify this more to prevent confusion. I joined the company in July 2004, and I was in the USA with the same organization (under the above-mentioned condition) between June 2007 and June 2008. I left the organization in the 1st week of August 2009. Now my questions are:
1. Am I eligible for gratuity?
2. How much gratuity will I get? (for 5 years or 4 years)

Regards,
Manish

If you were on the rolls of the same company for 5 years, then only you would be eligible for gratuity. Your deputation/transfer to the US company should have been made with an understanding that the service would not have been interrupted due to such transfer/deputation.

Regards,
Madhu.T.K

Dear Mr. Madhu,

Can an employee eligible for gratuity who has completed 4 years and 7 months of continuous service? The Gratuity Act states that any fraction of months should be adjusted to the nearest year. Does this mean an employee who completes 4 years and more than 6 months is eligible for gratuity?

Regards,
Keshav Reddy.

Dear Keshav, please read the Gratuity Act. If an employee has worked for 4 years and 240 days, then he is eligible for gratuity (240 days as actual working days).

Mr. Madhu is absolutely right. If an employee has worked for 5 years in a company, he is eligible for gratuity. After that, if he is transferred or deputed to another location (city, country, or any place within the same company), then the employee continues in continuity.

Mr. Manish, you are eligible for gratuity.

The Payment of Gratuity is to be interpreted as follows:

An employee who has become eligible for gratuity will be paid gratuity at the rate of 15 days' salary for every completed year of service. For calculating this 'completed year of service', any fraction of a year exceeding six months shall be taken as one year. This means that if an employee has worked for 5 years and seven months, he will be eligible for six years' gratuity. On the other hand, if he has worked for 5 years and four months, then he will get gratuity for five years only.

However, there is a High Court judgment which allows gratuity to an employee who had completed four years and 240 days in the fifth year of service. Therefore, service of 240 days in the fifth year is mandatory to determine the gratuity payable to an employee.

Regards,
Madhu.T.K

Dear Mr. Madhu,

I have been really longing to post my comment on this subject for a long time since I have noticed that a lot of members on this site are asking the same question (gratuity eligibility for 4 years and 240 days) without getting the proper answer.

Firstly, the question of eligibility for gratuity for people working for 4 years and 240 days doesn't arise as the 240 days' service is only considered for those who work in seasonal employment and not for those who are working on a regular basis on company payrolls. For them, the minimum eligibility of 5 years has to be completed as per the definition of "continuous service" of the Gratuity Act.

Secondly, I have noticed that whoever raises this question refers to a judgment given by the Madras High Court on Payment of gratuity for working 4 years and 240 days. Well, one needs to know that the judgment is given by the Madras High Court and it will only be applicable within the jurisdiction of the Madras High Court and not all over India and only if the merits of the case match with that case in reference. One must understand that an Award or Judgment given by the High Court needs to be ratified by the Government before it is included in the relevant Act and becomes a law for everyone.

Eagerly waiting for your views on the above discussion.

Regards

Dear Madhu,

I agree with Madhu but want to modify the above-mentioned statements:

a) Five years must be completed for eligibility for gratuity.

b) Regarding the previous question, four years and seven months are not sufficient because a minimum of 240 working days out of 365/366 days of the year is required for gratuity eligibility in the fifth year.

c) Concerning the Madras decision on 240 working days for the fifth year, it is applicable nationwide as the court considered factors such as earned leaves, sickness, casual leaves, national festivals, holidays, disasters, inclement weather, strikes, electricity problems, repairs, sudden deaths, family functions, seminars, riots, poor public transport, funerals, etc. These considerations were drawn from previous cases across India.

Thank you.

Thank you for replying. Let me clarify this more to prevent confusion. I joined the company in July 2004, and I was in the USA with the same organization (under the above-mentioned conditions) from June 2007 to June 2008. I left the organization in the first week of August 2009. Now my questions are:

1.) Am I eligible for gratuity?
2.) How much gratuity will I receive - for 5 years or 4 years?

Regards,
Manish

Dear Manish,

Yes, you are eligible for gratuity because you were on the same company payroll for continuous five years. Your gratuity will be calculated as follows: Basic salary * 15/26 * number of years of service.

Please note (as Mr. Madhu has also described above): For calculating the 'completed year of service,' any fraction of a year exceeding six months shall be taken as one year. This means that if an employee has worked for 5 years and seven months, he will be eligible for six years of gratuity. On the other hand, if he has worked for 5 years and four months, then he will get gratuity for five years only.

Hi Manish,

To be eligible for Gratuity, you need to serve an organization for a continuous period of 5 years. The court ruling by the Madras High Court has not been ratified by any amendment in the law. The law remains the same, and the Madras High Court decision is applicable in the particular case.

Manish has been on an L1 Visa to the United States during the period of your employment. In the case of an L1 Visa, technically speaking, you have been paid by a company outside India under a different contract. There is a break in service, and I am afraid you are not eligible for gratuity unless you have a document from your employer stating that the period you served in the United States is considered as continuous service.

Dear Manish,

My suggestion is not to disappoint you, but whatever replies you have received, I think you are not eligible for the gratuity. This is because, as per Indian gratuity law, an employee should have served a total of 5 years in the same payroll of the organization. As you mentioned, when you were in an abroad location, your payroll changed even though you were with the same organization. Therefore, the company may reject the request you raised for gratuity. This is just my opinion, and it may not be entirely correct.

It is my wish that you should receive gratuity for the many years you have served them. Good luck, and please do post us the gratuity confirmation given by your company. This will clear all doubts for all of us.

Prathamesh HR - SPOC Reliance Life

Hi Manish,

You are eligible for Gratuity in case the company has not settled your account by relieving you from services while you were on deputation. In the absence of any termination occurring, you are considered to be in continuous employment with the company. In such cases, you are eligible for Gratuity for the entire period of your services with the company, including your deputation to the US unless it is specified that you are not entitled to any retirals as applicable in India. If it was mentioned so, then you are entitled only to four years of Gratuity. Otherwise, you are eligible for Gratuity for the entire five years.

K. Ramesh

Court's rulings do not require rectification as the court has interpreted the existing law only.

Dear,

As per the Gratuity Act, continuous five years of service make a person eligible for gratuity. In your case, it is not fulfilled, so how can you be eligible for gratuity? Hope you understand.

I worked for 4 years and 10 months in my previous company. Should the company have given me a gratuity amount? Please reply.