Gratuity Dilemma: Do We Owe Full Benefits if an Employee Passes Away Before 5 Years?

Dear Sir,

Please let me know if an employee dies while on duty within 5 years, is he entitled to gratuity for the entire duration of employment. Our employee passed away after completing 3 years of service. Do I need to settle his gratuity for the entire service period, up to 5 years, or is he exempt from receiving gratuity?

Please advise me at your earliest convenience. I would be grateful for the correct guidance from you, dear seniors.

Thank you.

Dear Friend,

Please note, as per the Gratuity Act, any employee who dies during his service with the company is eligible to receive gratuity based on his years of service. Whether he has completed 1 year or 5 years does not matter. According to the act, we are required to calculate the number of years of service and pay it to the dependents.

Thank you,
Yogeesh

The nominees of the deceased employee will receive gratuity calculated for the 3 years of service only. The last drawn wages/salary preceding his termination in employment due to his death shall be considered.

Regards

In the event of death, the gratuity amount has to be paid to their dependents for the years of service rendered to your organization. The calculation would be as follows: Last drawn basic salary (Basic + DA) * 15/26 * number of years of service.

Regards,
Sunil

Dear Friend,

Please note, any employee/staff, once they join the company, and during their service, if an accidental death occurs, they are eligible for gratuity based on the number of years served in the company, such as 1 year, 3 years, or 6 years, as per the Gratuity Act. We have to calculate the payment based on the gratuity formula.

In case the management/HR policies of the company are willing to pay gratuity based on the employee's age group, it is up to their decision. You can suggest your idea to them, and if they decide to pay, you need to calculate the employee's age details to determine how many years they can carry their employment up to their retirement. Calculate the remaining years based on the employee's date of birth (DOB) details provided in the employment contract.

Please note that there is no change in the gratuity calculation, as it remains the same for both benefits.

I hope the above points have clarified any doubts.

Thank you.

Yogeesh

Hi,

I want more clarification. Let's consider an example - employee "X" joined the private organization "ABC" on April 3, 2011, and unfortunately died in an accident on April 4, 2011. Will his/her nominee be eligible for gratuity under The Payment of Gratuity Act, 1972? If yes, what will be the amount of gratuity if "X's" basic + DA is Rs 6000.

Dear Friend,

Your question is still not clear. However, please find the clarification below for your reference.

You have shown the details from April 23, 2011, to April 24, 2011. This indicates that he served duty for only two days as per his employment contract. According to the 1972 act, individuals are eligible from the day they start. In the case of accidental death, sometimes we need to verify on a case-by-case basis, checking if he was suffering from any disease earlier. We will need to review his medical report, and all formalities will be decided based on the management's decision since he served only two days.

As per the act, the nominee can only receive a pension after submitting Form 2 - Nomination & declaration form. Following this, all formalities will proceed.

For this particular case, you may contact the most senior individuals to find a solution.

Thank you,
Yogeesh

Dear All,

Suppose an employee dies within 2 days from the date of joining, are they eligible for Gratuity? If yes, what will be the gratuity amount?

Please guide.

Hi Pulkit,

If the employee has only worked for 2 days and then dies, then yes, gratuity should be paid to his legal heir or nominee. There is a formula to calculate the gratuity amount, https://www.easycalculation.com/fina...tion-india.php.