Eligibility for Gratuity - resigned after a service of 4 years 10 months

Dear All,

One of the employees in my company has resigned after a service of 4 years and 10 months. Is he eligible for Gratuity? Please explain.

Regards, M K Chopra

He is eligible only after completing 5 years of service in an establishment. After the completion of 5 years, only then does his eligibility arise. Only after his confirmed eligibility can the calculation of gratuity be made according to the provisions of the Gratuity Act.

Dear P. Ramachandran,

Thank you for your prompt reply.

Let us approach my question from a different perspective. My employee has worked for 240 days in the last year, and he is claiming it as a full year for the purpose of gratuity eligibility. Is he correct?

Regards, M. K. Chopra

Dear M K Chopra,

Strictly according to the Payment of Gratuity Act, 1972, the employee is not entitled to any gratuity because of the non-completion of five years of continuous service as per Section 2A of this Act. However, according to the judgment of the Hon'ble Madras High Court, he might be claiming gratuity from you. Now, it is up to you whether, after going through the judgment of the Hon'ble High Court, you want to give the gratuity amount or contest the case.

Regards,

R.N. Khola

For your clear reference, herewith I have attached the gratuity file. It will provide proper guidelines.

Dear Mr. Chopra,

I understand that you are raising this doubt to solicit responses from other members. This issue has been discussed numerous times in this forum or cited in legal documents. However, I would like to provide my interpretation once again regarding the payment of Gratuity:

1. Firstly, refer to the Payment of Gratuity Act 1972 (please see Section 1(3)).

2. The employee must fall under the definition in Section 2(e).

3. Gratuity is payable to an employee upon the termination of their employment after they have rendered CONTINUOUS SERVICE for not less than five years (Section 4).

4. CONTINUOUS SERVICE is defined in Section 2A. An employee is considered to have completed one year of service if they have worked for 240 days during the twelve calendar months preceding the calculation date.

Nowhere in the Act or Rules is it mentioned that an employee must complete a full five calendar years to be eligible for gratuity. Completion of 240 days can be considered as one year of continuous service.

I hope this clarifies your doubt. If you have any further questions, please provide the exact date of the employee's joining the organization, the date of termination, the number of days worked in the last five years, categorized year-wise, and all relevant information as per Section 2-A(1).

Hi,

This is Sami from Abu Dhabi. Basically, I am from Hyderabad. I am working here in Abu Dhabi, but in the UAE, the gratuity system is totally different. Here, if an employee completes one year, they will be eligible for gratuity.

Syed Sami

Dear All,

One of our employees who joined our organization in Apr-09 passed away on 15th July 09. According to the gratuity act, he is eligible to receive his gratuity amount. Please guide me on how it will be calculated and the legal way to disburse this. We have a gratuity fund with LIC; what is the procedure to claim this?

Regards

Mahender Ji will never be entitled to gratuity since he joined in Apr-09 and expired on 15 July 09. A continuous service of 5 years is a must to be entitled to gratuity.

Hi,

Please find information about Death on Gratuity. We have used it in our company as per the attached file and as per the client guide.

Regards,
Deepak B

Yes, Mr. Mahender,

The deceased legal heirs are entitled to gratuity as well as pension. The calculation will be based on his age and his remaining tenure (i.e., retirement age).

Regards,
Manoj Nair

Mr. Chopra,

Your employee is eligible for gratuity amount. Please find attached the Honorable Madras High Court decision.

Regards,
N.S. Bhanuprakasha

He is definitely eligible for gratuity as the basic criteria, apart from the fixed 5 years, is that he should have completed 4 years and 240 days in his job.

Gratuity is 15 days' salary for every completed year of service. It is calculated as follows: Wages/26x15x No. of years of service. Here it will be: Wages/26x15x1/12x3.5.

Assuming his wages were Rs. 5000/-, the Gratuity will work out as: 5000/26 = 192.00 x 15 = 2880 x 1 (one year) = 2880/12 (months) = 240 x 3.5 (months of service) = Rs. 840.

Trust this answers your query. Cheers! Vasant Nair

Dear Sir,

I have a query of the same kind. I was supposed to complete my 5-year tenure on September 13, 2009, in NIS Sparta (a Reliance ADA company). However, due to a change in the engagement model, I was asked to move to Reliance Communications (the flagship company of Reliance ADA Group) on August 20th, 2009. Would I be eligible for gratuity? I would appreciate it if you could reply.

Regards,
Jitesh Kumar.

Mahender Ji will never be entitled to gratuity since he joined in Apr-09 and expired on 15 July-09. A continuous service of 5 years is a must to be entitled to gratuity.

If you don't know the law, then never comment. For your knowledge, please refer to section 4(c) of the Act:

(c) on his death or disablement due to accident or disease: Provided that the completion of continuous service of five years shall not be necessary where the termination of the employment of any employee is due to death or disablement:

Provided further that in the case of the death of the employee, gratuity payable to him shall be paid to his nominee or, if no nomination has been made, to his heirs. If any such nominee or heir is a minor, the share of such a minor shall be deposited with the controlling authority who shall invest the same for the benefit of such a minor in such a bank or other financial institution, as may be prescribed, until such a minor attains majority.

Explanation: For the purposes of this section, disablement means such disablement as incapacitates an employee for the work which he was capable of performing before the accident or disease resulting in such disablement.

Your reply is only partly correct. The first proviso of Section 4 of the Payment of Gratuity Act 1972 reads as "Provided that the completion of continuous service of five years shall not be necessary where the termination of the employment of any employee is due to death or disablement."

Hi,

In case of death or disablement, there is no minimum eligibility period. The completion of continuous service of five years shall not be necessary when the termination of the employment of any employee is due to death or disablement. In the case of the employee's death, gratuity payable to him shall be paid to his nominee or, if no nomination has been made, to his heirs. The nominee/legal heir will receive the maximum ceiling of Rs. 3,50,000/-. In normal cases only, the formula will be considered.

Regards,
Bhuvana.AL

Dear All,

One of my friends has left the company after serving for more than 10 years. Now, his PF amount has been withdrawn, but the family share is yet to be withdrawn. Kindly advise on the process of claiming the family share. He is 35 years old and is currently working in another company where PF deductions are not made by the company.

Dinu

Dear Mr. K C S Kutty,

I have an issue. My father was a government servant and passed away on 30.03.2004. He had completed 19 years, 8 months, and 22 days of total service. Could you please inform me of the total gratuity eligibility based on the above service?

Looking forward to your kind attention and reply.

Thank you,
Sha

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irappa_k <link updated to site home> <image no longer exists>

Join Date: May 2010
Posts: 2
Gratuity Eligibility

Dear Sir,

I have completed 4 years and 10 months of service in my present organization, and I have accumulated 130 leaves. Am I eligible for a gratuity claim or not? I have gone through the Gratuity law, which states that gratuity is only eligible after completion of 5 years, with permitted accident or death of an employee after working for 4 years and 240 days in the 5th year of service. Please clarify.

The gratuity act has been amended. The amount 3,50000 has been amended to 10,00,000. Please check the Gazette Notification.

Ensure single line breaks between paragraphs for better readability.

Dear sirs,

I am working in a shipping agency and I am confused about my gratuity-related question. My joining date was 1 June 2014, and I gave my resignation to the company with a one-month notice period. My last working day is 16 April 2019. Am I eligible for gratuity?

For reference, I have read many comments and articles stating that to be eligible for gratuity, one must complete 5 years of service. However, if one completes 4 years, 10 months, and 11 days, they are also eligible for gratuity. Additionally, my company operates with a 5-day workweek.

Thanks in advance,

Hello Sir,

I have left my private company after 4 years, 7 months, and 15 days, with my last working day being on 25th April 2016. I was under the impression that there needed to be 5 full years of continuous service, but it seems from the comments and other recent judgments that the last 5th year can be considered even with fewer days.

Could you please clarify if I can claim gratuity from my organization? What reference should I provide alongside my application? In my CTC, I have 3 post-retirement benefits:
1. PF - 12% of basic salary
2. Superannuation - 15% of basic salary
3. Gratuity

As mentioned earlier, since I have left the organization, what is the maximum amount I could claim? I am in need of some additional finances as I have just started my new venture - a startup.

Regards,
Dinesh

Hi,

I need to know if one of my employees has died and has completed his 7 years of service. Is he eligible for gratuity, and if yes, what will be the calculation under the Payment of Gratuity Act? How will it be calculated in this case? Please help and provide your feedback.

Hi All,

Does the 240 working days include weekends as well? I work 5 days a week, so can I count weekends (Saturday & Sunday) when calculating the 240 days?