Gratuity Calculation After an Employee's Death: Does Unserved Service Count?

Please let me know if there is any rule/law as per Gratuity Act for the calculation of gratuity in case of the death of an employee. I mean, whether the remaining period of unserved service after the death of the employee shall be considered for calculating gratuity.

The Payment of Gratuity Act, 1972 does not have any provision regarding the payment of gratuity by the employer to the nominee(s) or legal heir(s) for the remaining period of unserved service after the death of the employee. The payment is to be made only for the actual service rendered by the deceased employee.

Regards,
R.N. Khola

Dear R.N. Khola,

Is the training period of any employee considered complete after five years?

Regards,
Ashish

Hi Ashish,

Gratuity is not related to experience but the number of years in service. If you have paid a salary instead of a stipend to the trainee during the training period, that will be considered.

Regards,
Rashee

Gratuity Calculation in case of Death - regarding this, we have the opinion of our legal consultant that it is necessary to calculate gratuity in the case of death.

Regards,
Sandip Kumbhar
Jr. Personnel Officer.

The payment of gratuity is done based on the actual service rendered or completion of 5 years is a must.

Sumit

As per the guidelines of the Gratuity Act, gratuity calculation is as follows: 15 days' wages for every completed year of service or part thereof in excess of 6 months. The formula is Wage/26 x 15 days x Number of years of service. For example, if an employee has completed 17 years and 7 months, it is considered as 18 years. You need not consider future service in the case of death.

However, if you have a Group Gratuity Scheme with LIC OF INDIA, they cover the risk, and the nominee of the deceased employee receives gratuity for the service rendered and the service that he would have rendered in the company if he were alive (future service as well). This is a wonderful scheme that will be beneficial for HR professionals. Please contact LIC and make an annual payment to LIC; this will also earn interest every year. Advise your Finance department about the benefits, and they will be convinced.

All the best,
M.V.KANNAN

Gratuity Payment in Case of Employee Death

Gratuity is payable to an employee for the service he has rendered to the company. In the case of death, the company is not liable to pay for the future unserved service period. The payment is not necessarily for the completion of 5 years in case of death and permanent disablement. The calculation is done as mentioned above by Mr. Kannan.

Person to Whom Gratuity is Payable in Case of Death of the Employee

In short, subsection (1) of the Gratuity Act 1972 states that it is payable to the nominee, and where no nomination has been made, to the heirs of the employee.

Regards,
Shreekanth.P.R

* Last wage drawn X 15/26 Days X Number of years worked = Gratuity Amount.

* Completion of 5 years in the case of death is not necessary.

* 15 denotes the number of days per year.

* If an employee has completed 6 months in any year, it will be considered as a year, and we will calculate 15 days for that year as well.

Yes, the training period is also part of an employee's employment if there has been no definite break in service or if the training is under the Apprenticeship Act.

Vasant Nair

PS: Mr. Khoda, I hope you do not mind my answering this query.

As per the Payment of Gratuity Act, gratuity is paid for actual years of service irrespective of whether the employee completed 5 years or not in cases of death. However, if you have opted for the LIC Group Gratuity scheme and have paid the contributions, full gratuity will be paid by LIC in the event of the employee's death, including the remaining service balance. This is an added advantage if an LIC policy is taken.

I have read your topic. As far as the Payment of Gratuity Act, 1972 is concerned, gratuity is paid to an employee only for the actual service rendered by the employee. There is no provision for calculating and paying gratuity after the death of an employee, or it may be termed that the unserved period cannot be taken into account. For death cases, it is not necessary to complete five years of service.

Regards,
pkc3000

You have mentioned that 6 months of attendance will be considered as one year for gratuity calculation, but this statement is not correct.

According to the Gratuity Act, periods in excess of 6 months will be rounded up as one year. Consequently, 6 months and below will be rounded down and will not be taken into account for gratuity calculation.

Regards,
Abbas.P.S

Gratuity Payment in Case of Employee Death

The Payment of Gratuity Act, 1972 does not have any provision regarding the payment of gratuity by the employer to the nominee(s) or legal heir(s) for the remaining period of unserved service after the death of the employee. The payment is to be made only for the actual service rendered by the deceased employee. However, it is at the discretion of the management to pay gratuity for the balance period as well. In our organization, we pay for the entire service period (up to 58 years) in case of death on the premises.

For actual or normal death, we only pay for the service period. Additionally, we do not consider the apprenticeship period for calculation purposes. Probation and confirmation periods are the only ones taken into account for the preparation of gratuity.

Regards,
R. Palaniswamy

Dear Member,

Gratuity is payable to an employee for the service he has rendered to the company. In case of death, the company is not liable to pay for the future unserved service period. However, one must complete 5 years of service to be eligible for Gratuity.

All the best,
A.G. Rangarajan
9741155458

In The Payment of Gratuity Act, there is no provision that the employer should pay the gratuity up to the retirement age to the deceased employee. However, there is a Group Gratuity Scheme with LIC in which LIC makes the payment to the employees after considering all those years up to the retirement age (up to 58 years) based on their present Basic+DA.

For example, if an employee has been working for the last three years in the company and is 34 years old, and unfortunately passes away during employment, LIC will make the payment for (58-34 = 24 + 3) 27 years.

Regards,
Rajiv Singh

Payment of Gratuity

Gratuity shall be payable to an employee upon the termination of their employment after they have rendered continuous service for not less than 5 years. However, completion of continuous service of 5 years is not necessary in cases where the termination of employment is due to death or disablement exceeding 6 months. The employer shall pay gratuity at the rate of 15 days' salary/wage for each completed year of service. The amount of gratuity payable to an employee shall not exceed Rs. 10,00,000.

Employee's Death and Gratuity Eligibility

Can an employee be eligible for gratuity if they pass away after three months of joining the organization?

Regards,
Jagan