Gratuity Eligibility: Does 4 Years and 9 Months of Service Qualify for Benefits?

One of my executives has worked continuously for 4 years and 9 months, and now he has resigned. Will he be eligible for gratuity, or is it only after the completion of 5 years? Please guide me.

Regards,
REx

Your executive is not eligible to receive gratuity. Except in the case of death, no one is entitled to gratuity without completing five years of service.

Thank you.

One of my executives has worked continuously for 4 years and 9 months. Now, he has resigned. Will he be eligible for gratuity, or is it only after the completion of 5 years? Please guide me.

Regards,
Rex

If he completes four years and nine months, then calculate if in those nine months he completed 240 days or not. If he did complete it, then he is eligible for that.

Thanks

Dear Rexmartin,

An employee who has completed 5 years of service is eligible for payment of gratuity. If the continuous service of the said employee during the 5th year is more than 6 months, the same shall be deemed to be a full year, and the said employee will be eligible for payment of gratuity since he has completed 4 years and 9 months.

Regards,

RL Dhingra
Advocate
9818309937
Email: rld_498@rediffmail.com.

Dear Mr. Rex Martin,

Please read Explanation 2 to Section 4 of the Payment of Gratuity Act 1972. It is provided that for every completed year of service or part thereof in excess of six months, the employer shall pay gratuity to an employee at the rate of 15 days' wages based on the rate of wages last drawn by the employee concerned.

Regards,
RL Dhingra, Advocate
9818309937
Email: rld_498@rediffmail.com

On the date of relieving, if an employee completes five years of service, then I believe they are eligible for gratuity.

Regards,
Amitkumar

Gratuity Eligibility and Calculation

After the completion of 5 years, an employee is eligible for gratuity. You can calculate the gratuity as follows:

BASIC SALARY × 15 × YEARS OF SERVICE COMPLETED ÷ 26 = Gratuity.

For example, if the basic salary is Rs. 5000 and the years of service completed is 6 years, then the gratuity amount will be calculated as follows:

5000 × 15 × 6 ÷ 26 = Rs. 17,307.69.

Gratuity Eligibility

On the date of relieving, if employees have completed four years and 240 days in the fifth year, then they are eligible for gratuity. The employer shall pay gratuity to an employee at the rate of 15 days' wages based on the last drawn basic wages of the concerned employee.

Regards,
Rajesh

I am afraid I cannot help but disagree with you.

An employee has to work for 5 years to become eligible for the payment of Gratuity. If in the fifth year, an employee puts in continuous service of 240 days, he is entitled to receive Gratuity.

The "Six Months" clause applies NOT for eligibility but for calculation purposes. Therefore, if an employee, in the fifth year, works only for a continuous period of SIX MONTHS, he is NOT entitled to Gratuity since in six months he could not have completed 240 days.

However, for calculation purposes, if an employee works for 5 years and six months, Gratuity in his case will be calculated for 6 years.

I am sure you will agree with this clarification.

Best Wishes,

Vasant Nair

Dear Rexmartin,

An employee who has completed 5 years of service is eligible for the payment of gratuity. If the continuous service of the said employee during the 5th year is more than 6 months, the same shall be deemed to be a full year. The said employee will be eligible for the payment of gratuity since he has completed 4 years and 9 months.

Regards,
RL Dhingra
Advocate
9818309937
Email: rld_498@rediffmail.com.

I fully agree with Mr. Dhingra! If an employee completes continuous service for more than 4 years and 6 months, this service is considered as 5 years of continuous service.

Regards,
Mayur Parmar

To calculate gratuity:

Gratuity Calculation Formula

Last drawn salary * 15 * Number of years of service / 26 Days

Regards,