Gratuity Entitlement Confusion: Is It 5 Years or 4.5 Years? Seeking Clarity!

Hi,

Can anyone guide me about the entitlement of Gratuity? There is a little bit of confusion regarding the entitlement of gratuity. When is an employee entitled to Gratuity? After the completion of five years or the completion of more than 4 years and six months? If I am not mistaken, there is a Karnataka High Court judgment also on this matter, stating that an employee will be entitled to gratuity after the completion of 4 years and six months. I need your view on this matter.

Thanks & Best Regards,

Arun Gupta
9312010127

Dear Arun,

There is no such judgment by the Karnataka High Court, and gratuity applicability is for 5 years only.

Regards,
JS Malik

Dear,

We do not have any objection if any of the employers give gratuity payment on completion of 4 years & six months of service. If there is any judgment, then send it to the employer along with the claim for gratuity.

R.N. Khola

Dear Arun,

The entitlement of Gratuity is 5 years of completion of regular service in all industries except the News Paper Industries because in the news paper industries, it is 3 years (as per the Working Journalist & News Paper Workman Act).

Hi,

As per the Gratuity Act, an employee has to complete 5 years of service in the same establishment/factory to be eligible. Also, if you have the Karnataka High Court judgment, please post it here and share it with our HR professional.

Regards,
Mouli

Hi,

I have a doubt... In the appointment letters of our company, we mention the following provision: "Provisions of the Payment of Gratuity Act will be applicable in case of your retirement or death." Does that mean that only in the case of retirement or death, gratuity will be payable? If yes, can an employer specify such clauses?

Regards,
Neha Sharma

Dear Neha,

When the payment is to be made as per the Act itself, there is no need to mention anything in the appointment letter. However, if you wish to offer a more favorable amount, then we must specify this while finalizing the terms and conditions of employment. If we include conditions that contradict the law, those conditions are considered null and void. Please review the Payment of Gratuity Act, 1972, if it is applicable to your establishment, and adhere to the provisions outlined in this law.

R.N. Khola

Thank you, Mr. Khola, for resolving my query. That means it's useless to specify in the case of retirement or death. Even if a person completes 5 years, then too the employee is eligible for gratuity.

Regards,
Neha

Dear Neha,

Of course, five years of continuous service as per Section 2A of the Payment of Gratuity Act, 1972.

You are correct. Upon completion of continuous 4 years and 6 months of service, an employee is entitled to Gratuity. A Madras High Court judgment is available in this regard.

Dear Arun,

Initially, it is compulsory to complete the five-year term to receive the gratuity amount.

Regards,
Digpal

Dear Neha,

For entitlement of Gratuity, 5 years continuous service is a must. 4 years and 6 months cannot be considered as 5 years, i.e., for eligibility. For calculation purposes of Gratuity, anything more than 6 months is to be considered as a year. For example, if an employee puts in 6 years, 6 months, and 1 day of service, the gratuity calculation needs to be made as if he had put in 7 years of service.

In the case of death, the ceiling of 5 years is not mandatory.

Regards,
Rajgopal

Dear Arun,

As per my knowledge, gratuity is payable after the separation of an employee. The eligibility criteria are that the employee must have worked for the same company/establishment for at least 5 years in continuation.

Dear,

Gratuity is applicable only when an employee has completed 5 years of service in the same organization. After completion of 5 years, each 6 months will be counted as 1 year.

With regards,
Sunny Mahajan

Can anybody guide me about the Bonus Act, like what is the minimum bonus and maximum bonus, and what is the ex gratia? Please...

Please see the copy of one such judgment.

Please see the attached copy of the judgment.

Copy of judgment is attached herewith.

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Corrected version:

A copy of the judgment is attached herewith.

It's 5 years only. But after completion of five years, someone who has worked for 5 years and 6 months would be entitled to get payment for 6 years.

Dear All,

I can see many HR fraternity members posting that 5 years is the minimum eligibility for Gratuity. This message is for those who have just referred to the books on Gratuity/Bare Acts, etc. Please refer to the below ruling in the Honourable Court of Madras High Court:

[Mettur Beardsell Ltd. (represented by its Personnel Manager Vs. Regional Labour Commissioner (Central Authority under the Payment of Gratuity Act, 1972), Madras, 1998 LLR 1072 (Mad. HC)]

Any employee who has completed 4 years of continuous service and 240 days in the fifth year is to be considered as having 5 years of service for calculating Gratuity. As per Section 2A of the Payment of Gratuity Act, 240 days of continuous service have to be considered as a year's service.

Regards,
Suresh Ramalingam, B.A., B.L., M.L.M.
Manager - Compliance

Dear Suresh Sir,

As you explained about gratuity, that is- (Refer to the below ruling in the Honourable court of Madras High Court Mettur Beardsell Ltd. (represented by its Personnel Manager Vs. Regional Labour Commissioner (Central Authority under the Payment of Gratuity Act, 1972), Madras, 1998 LLR 1072 (Mad. HC) Any employee who has completed 4 years of continuous services and 240 days in the fifth year is to be considered as 5 years of service for calculating Gratuity. As per Section 2A of the Payment of Gratuity Act, 240 days continuous services have to be considered a year's service.)

Sir, is it applicable only for Madras or is it applicable for all over India.

Regards, Bandini

Dear Bandini,

It is applicable all over India, and you can also use it as a reference in the case of other states.