Gratuity Eligibility Confusion: Is It 5 Years or 4 Years and 240 Days of Service?

Hi, how many years of continuous service are required for eligibility for gratuity? Is it 5 years or 4 years and 240 days?

As per the amended act, the years of service should not be less than 5 years of continuation.

Regards,
Suchita.

Yes, you're right. But for Tamil Nadu, employees have to complete only 4 years and 240 days for eligibility. Please refer to the attachment. Waiting for your comments.

Cheers,
S R Karthik

The eligibility criterion for receiving gratuity under the Payment of Gratuity Act is five years of continuous service, not four years. The method for calculating one year of continuous service was determined by the Honourable Madras High Court in the referenced judgment. According to this ruling, a worker is considered to have completed one year of continuous service if they have worked for a minimum of 240 days in that specific year. It is important to note that this law applies uniformly across India and is not limited to any particular state.

Regards,
V. Harikrishnan

I am working for a software company and I am wondering whether I am eligible for gratuity. Here are my details: I worked from April 2005 to June 2007 in India and then moved onsite (U.S.A) through the same company. I am still working with the same company to date.

Please help me with this.

Thanks,
Bhanu.

Respected experts, I have worked for 12 years with a JV company that only imports and sells machines from its parent European JV partner. In India, the company was operated by a single promoter who now plans to sell his JV share to the parent company after presenting them with a highly optimistic forecast. When the new employer takes over, they will naturally have high expectations from our small workforce, which has worked diligently all these years under the promise of better prospects despite limited resources and training. We are not optimistic now due to the changing market trends of the products, as these negotiations have been ongoing for the last three years, draining our patience and energy.

Gratuity and Benefits Concerns

Can we claim our gratuity or any other benefits from the current promoter, or are we obligated to work under the new owner once the transition occurs suddenly? Do we have no choice? Ideally, we would like our 12-year association with the current company to be acknowledged first, with gratuity, before deciding whether to enter into a new work agreement with the new management. We hope you understand our dilemma and can provide us with useful information.

Thank you.

Respected experts, I have worked for 12 years with a JV company that solely imports and sells machines from its parent European JV partner. In India, the company was managed by a single promoter who now plans to sell his JV share to the parent company after presenting them with a highly optimistic forecast. When the new employer takes over, they will naturally have high expectations from our small workforce, who have dedicatedly worked for all these years with the promise of better prospects, despite limited resources and training. We are not optimistic now due to the changing market trends of the products, as negotiations have been ongoing for the past three years, draining our patience and energy.

Gratuity and Benefits Inquiry

Can we claim our gratuity or any other benefits from the current promoter, or are we compelled to work under the new owner once the transition suddenly takes place? Do we not have any choice? Ideally, we would like our 12-year association with the current company to be acknowledged first, with gratuity, before deciding to enter into a new work agreement with the new management. We hope you understand our dilemma and will provide us with valuable information and support.

Thank you.

Dear Mr. Reddy, I forgot to ask you about the location of Cognizant where you worked while in India. In Tamil Nadu, software companies are covered by the provisions of The Tamil Nadu Shops and Establishments Act. Therefore, the Payment of Gratuity Act is applicable to them according to the provisions of Section 1(3)(b) of the Payment of Gratuity Act. Persons engaged in software development would come within the definition of "employee" as defined under Section 2(e) of the Payment of Gratuity Act. Therefore, employees of software companies are governed by the provisions of the Payment of Gratuity Act unless the terms of gratuity offered by the software company are better than those of the Payment of Gratuity Act, in which case the better terms will prevail.

In your case, assuming that you had worked in Tamil Nadu, you are entitled to claim gratuity from your employer if you had worked with them for five continuous years. Also, considering Cognizant as your employer even while on-site, the services rendered on-site should be considered when calculating your length of service with Cognizant. If the length of service at the time you leave the company is not a complete five years, for example, 4 years and a few months, then to determine if the remaining months after four years count as a year of service, the number of days worked in those months must be at least 240 days.

If you have worked in a different state in India, please write back, and I will try to clarify.

Regards, V. Harikrishnan Joint Commissioner of Labour (Retired) Government of Tamil Nadu Labour Law Consultant Chennai

From the information furnished by you, I am of the view that you are eligible to receive gratuity under the Payment of Gratuity Act.

Dear Mr. Harikrishnan, I would like to thank you for the timely response you provided. I have now received my gratuity payment from my earlier company. Appreciate your help!

Thanks.

Assuming that 10 or more persons were working in the establishment in which you were/are employed, and based on the information furnished by you, you have worked with the same employer. Therefore, you are entitled to get gratuity under the Payment of Gratuity Act. The encashment of PL depends on the Act applicable to you, that is whether your establishment is registered under the Factories Act or under the Shops and Establishments Act.

Regards