Gratuity Eligibility Question: Can You Claim It After 4 Years and 240 Days in the 5th Year?

Dear Citimates,

Greetings to you all!

Recently, I have joined this site and found many interesting and knowledgeable discussions. I am very pleased and glad to be a part of this community.

Here, I have a doubt regarding Gratuity Eligibility. The Gratuity Act states that an employee should complete a minimum of 5 years of service for eligibility. Additionally, the employee should work for a minimum of 240 days a year (including declared holidays and days of leave with wages) to claim gratuity for that year.

If an employee has worked for 4 years and in the 5th year, did not work for 12 calendar months but completed 240 days of work within 10 months and then quit – is the employee eligible for gratuity? Does the employer have the right to deny gratuity for not completing the full 5 years?

I am looking forward to your valuable response!

Regards,
Naveen.M

Gratuity Eligibility Based on Days Worked

An employee was present for 240 days; therefore, he is eligible for gratuity even if he had not completed the entire 12 months in the 5th year.

Regards,
Vikram

Welcome to the CiteHR family. Congratulations on your maiden posting. Yes, he is eligible for gratuity. Please refer to the attached file.

Regards,
S. Sethupathy, Erode.

Dear All,

In continuation of the above discussion, I have a query.
(1) If an employee has worked for 10 years but has not completed services of 240 days in any year, then whether he is eligible to get gratuity. If yes, please quote under which proviso of the Act and any supporting citation, if any.
(2) Can we pay gratuity every month under CTC? Is it legal? Because reading the sections of the Act, there is no such proviso. Also, there is a risk as if an employee quits the job after 3/4 year, then technically he is not entitled to gratuity. So my query is, can we dilute our liability of gratuity by making monthly payment of the same.

Please give your expert opinion, suggestion, and views on the above.

Thanks in advance,

NIRAJ SHAH
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Dear Sir,

Please refer to section 2(c) of the Payment of Gratuity Act. This section contains the answer to your query. Before determining whether the employee is entitled to gratuity, I would kindly request you to provide the following information for each year:

1. Number of days the employee actually worked.
2. Number of days the employee was absent due to sickness.
3. Number of days the employee was absent due to an accident.
4. Number of days the employee was on leave.
5. Number of days the employee was on lay-off.
6. Number of days the employee was on strike or lockout, not due to their fault.
7. In all the scenarios mentioned from serial number 2 to 6, did the employer issue a written order informing the employee that absences due to sickness, etc., would be considered a break in service for calculating continuous service?

If you provide the above information, I will be able to offer my perspective.

I have worked in an MNC company for four years and ten months continuously without any break and left due to personal reasons. I have not been given gratuity benefits, saying that I have not completed five years as per the Gratuity Act. They have informed me that they have a tie-up with LIC for gratuity and could not provide me the gratuity as per the agreement with LIC. Can you please clarify whether I am eligible for gratuity and if yes, under what section or rule it is eligible?

Regards,
M. Saravanan

You have the option to approach LIC of India for your gratuity claim. This claim is required to be executed and presented through your last employer. As you have already completed 4 years and 240 days in the fifth year, you are eligible for gratuity. Go ahead and claim your gratuity.

Good luck to you.

Regards,
R B Yadav
Advocate

Thank you for your guidance. I have received gratuity from my employer through LIC, even though I have completed 4 years and 10 months. LIC Chennai region has already sanctioned it, and now LIC Mumbai region is also processing such cases. Thanks to the HR Site team.

Regards,
M. Saravanan

Break in Service and Gratuity Eligibility

An employee has worked for 7 years but has not completed 240 days in 3 of those years. Additionally, during this period, he stopped coming to work for one month. Can this be considered a break in service? Is he entitled to gratuity?

His attendance record is as follows: 116.5 days for the year 2006, 160.5 days for the year 2007, and from 2008 to 2011, he worked more than 240 days each year. However, in 2012, his attendance was 199 days. Please guide.