Am I Entitled to Gratuity If My Company Is Letting Me Go Due to Economic Reasons?

Hi,

I have worked in an organization for 4 years & 9 1/2 months. My company has asked me to leave due to economic reasons. I want to know if I am eligible to get gratuity as I am not leaving; rather, my company is asking me to leave. Please advise.

Thanks & Regards,
Vikram.

You are eligible for the gratuity. One becomes eligible for it after completing 4 years and 8 months of continuous service. The reason for leaving is not relevant. Submit your claim in the relevant form to the employer. They cannot deny gratuity.

Thank you so much for your answers. It would also be very helpful for me to understand what my entitlements are in this case. To date, my company has assured me the following:

1. 2 months' wages as compensation (8 days' notice is given to me)
2. Leave balance encashment

I want to know what else, in addition to the above, am I entitled to. It's quite clear now that gratuity is what I am entitled to. Kindly guide me on what else my entitlements are.

I was given to understand from other sources that I am entitled to the following also, in addition to the above 3:

a. Performance bonus for the year 2009-10 (my appraisal ratings were good, 4 out of 5)
b. 15 days' wages for every completed year of service - in this case, 5 years

Please advise if the above 2 are also part of my entitlements.

Thanks for your help.

Vikram.

Hi Vikram,

It's not at all appreciable to know that the organization asks an employee to leave after serving for 4 years, but due to the current scenarios, one can't help.

I would like to comment on the post regarding the eligibility of Gratuity. As per my understanding, till date, according to the Payment of Gratuity Act, 1972 & Rules, an employee is eligible for getting gratuity on completion of 5 years in an organization, where 240 working days make a year.

I am sorry to disappoint you on this. Wish you all the luck for your future endeavors!

PS: Please correct me, members, if I am wrong on the same.

Regards,
Shraddha

As per Sec. 25-F of the ID Act, 1947, for the termination of services of any employee, the employer has to pay retrenchment compensation, such as 15 days' wages for each completed year of service.

Dear Mr. Dixith,

Thank you for the clarification. I have noted that as per Sec. 25-F of the ID Act, 1947, for the termination of services of any employee, the employer has to pay retrenchment compensation, such as 15 days' wages for each completed year of service.

Could you also advise me on the following:
1. Performance bonus
My company has indicated to me that I am not eligible for gratuity despite completing 4 years and 9 months of continuous service.
Please advise if I can take legal action.

Thank you & Regards,
Vikram
Thank you.

For termination/retrenchment compensation as provided in the ID Act, you have to be a workman as defined under the Act. If you had been working in a managerial or supervisory capacity, you will not come under the ID Act. In that case, your termination clause as detailed in your appointment order will determine your eligibility for retrenchment compensation and the amount payable to you.

Regarding gratuity, a High Court judgment (previously shared) states that an employee who has served for four years and 240 days in the fifth year is entitled to gratuity. Following that judgment, you may be eligible for gratuity.

If a performance bonus is included in your benefits or CTC, you will receive it. You can request it, arguing that it is a form of 'deferred wages'. Similarly, you can also claim leave encashment.

Regards,

Madhu.T.K

Dear Mr. Madhu,

Thank you for the prompt response. One suggestion regarding all this useful information, which I notice people keep asking repeatedly without searching in Cite HR. Could we implement an FAQ section for such posts?

Regards,

Ukmitra

Hi All,

Thank you so much for the clarifications. I will take this up with my company and make sure I get what's rightfully due to me.

Thanks and Regards,
Vikram.