Confused About Gratuity Eligibility: Does Joining Date or PF Deduction Matter More?

User input:

My date of joining was 06.05.06. After a notice period of 1 month, I left the job on 30.04.11. After joining, they started deducting my PF after 1 year. Nothing about PF/Gratuity is mentioned in my appointment letter. Today, I received a call from HR that I have completed only 4 years, so I will not get Gratuity. Can anyone help in this case? For gratuity, is the date of joining important or PF deduction? Or are Gratuity and PF interlinked with each other?

Corrected text with spelling and grammar errors fixed and proper paragraph formatting:

My date of joining was 06.05.06. After a notice period of 1 month, I left the job on 30.04.11. After joining, they started deducting my PF after 1 year. Nothing about PF/Gratuity is mentioned in my appointment letter. Today, I received a call from HR that I have completed only 4 years, so I will not get Gratuity. Can anyone help in this case? For gratuity, is the date of joining important or PF deduction? Or are Gratuity and PF interlinked with each other?

Dear all colleagues,

Please guide me if any employee has resigned and is eligible for gratuity payment as per the Gratuity Act but is not willing to sign the application for gratuity payment due to personal reasons (occupation of company quarters). Can the employers process his gratuity without his signature and settle his full and final accounts?

PB Badri Vishal

Dear Sudhir,

With a successful completion of consecutive five years of minimum service in an organization that should be registered, you would be eligible to acquire Gratuity Fund. Gratuity may start from the Date of Joining or after the probation period. PF deductions depend on the company's norms. PF and Gratuity are not interlinked.

Best wishes,
Dsp aparna

1) It is very clear that you have completed five years (4 years 11 months 26 days) in your company.

2) Only PF is deducted from the employee's salary; gratuity is the loyalty bonus given to the employee for the services rendered. There is no contribution in terms of money made by the employee.

3) Yes, the date of joining is very important for the payment of gratuity; there is no connection between Gratuity and PF. In no case can your employer retain your gratuity if your organization is covered under the Gratuity Act 1972. Still, if the amount of gratuity payable under this Act is not paid by the employer within the prescribed time to the person entitled, the controlling authority shall, on an application made to it by the aggrieved person, issue a certificate for that amount to the Collector. The Collector shall recover the same, along with compound interest thereon at a rate specified by the Central Government, from the date of expiry of the prescribed time as arrears of land revenue and pay it to the entitled person.

Dear,

Basically, PF should be deducted from day one as gratuity is also applicable from the date of joining. However, PF is not linked with gratuity and vice versa. It is the appointment letter that clearly states the date of joining, and gratuity is counted from the date of joining. But in your case, even if we consider your Date of Joining (DOJ) as 30-04-11, you are still not eligible as you have not completed 5 years.

Dear Sudhir,

Greetings for the day.

First of all, please inform us if the company has provided you with an appointment letter. If yes, kindly review it and provide us with the appointment date. If the information you have provided is accurate, it appears that your total service length was 4 years and 11 months.

For eligibility for gratuity payment, completion of 5 years of service is mandatory, with each year requiring a consideration of 240 working days. The 5-year period must be continuous without any breaks.

Thanks & Regards,

Sumit Kumar Saxena
9899669071, 0120-4131277

Dear Sudhir,

Firstly, you should provide proper evidence of your date of joining, such as the appointment letter.

PF (Provident Fund) is not interlinked with gratuity. If you have completed 4 years, 11 months, and 26 days in the organization, then you are eligible for gratuity under the act. If you have completed 4 years and 240 days in the last year, then you are eligible.

Best of luck.

Regards,
Bunti

Your HR is right. You have not completed 5 years in your organization. It is the Government of India's rule, and you cannot go against it.

Thanks,
Sanjay

The qualifying criterion for Gratuity entitlement is from the date of joining the organization. In your case, you appear to be just short of 5 years. But then if you have worked continuously for 240 days in the 5th year, you are surely entitled to receive payment of Gratuity. Please ask the HR of your last organization how they arrived at the conclusion that you have worked only for 4 years.

Best Wishes, Vasant Nair

Dear Shri Sudhir Ji,

I do not exactly remember the date of the amendment in the PF Act, but it was certainly made before the year 2001, making it compulsory for employers to admit employees to PF from day one of service. Your actual length of service is 24 days, 11 months, and 4 years based on the data you have provided. Could you please tell me why it was not possible for you to continue in the service for one more week? It would have allowed you to claim gratuity without any dispute and also made your company contribution tax-free. If the length of service is more than 5 years, the company's contribution to one's PF is tax-free.

Thanks and regards,

Dear Experts,

In our organization, gratuity is paid after completion of every year instead of 5 years. The employer wants to know if this can be broken down and added as a monthly salary. For example, if the salary of an individual is Rs 20,000 per month, he wants to know if we can make it Rs 18,000 per month + Rs 2,000 as service compensation to make the Rs 2,000 amount tax-exempt.

Please advise.

Thanks,
Amit

Dear Amit Ji,

Gratuity is payable at the end of service, not every year upon parting. The final gratuity is payable at the last pay. The formula is 15 * No. of years of service * Last pay (basic + dearness allowance) / 26, subject to a maximum of 10 lakhs. If an employer wishes to pay more than 10 lakhs as gratuity, the law does not forbid them from doing so, provided that the employer recovers income tax on gratuity exceeding Rs. 10 lakhs and remits it to the government.

If your employer has discovered methods to reduce gratuity and other terminal benefits by paying them annually, the law is unable to intervene. In such cases, you may raise this issue with appropriate authorities like the Central/State labor commissioner, who are the competent bodies for disputes concerning gratuity payments. Before escalating the matter to these authorities, attempt to resolve it internally within the company. Inform the employer that even if they choose to pay gratuity yearly, it will be considered a bonus for employees, with the final gratuity being payable as per the Payment of Gratuity Act, 1972, upon the completion of service. The Act is mandatory for employers based on the number of employees in the company. If an employee leaves the company before completing five years of service, no gratuity is payable. However, in cases of service termination due to the death of the employee or permanent disability, the five-year service requirement does not apply.

I need help. I have worked with a staffing firm for 4 years and 11 months. Upon resignation, my manager asked me if serving the notice period would be required, and they agreed to accept my resignation immediately. However, they have now denied me gratuity. Is there any law through which I can claim what is due to me?

Any information will be greatly appreciated.

Regards,
Sameer Quadri

I joined an organization on 14th Aug 2008 and resigned on 19th Aug 2013. How much gratuity will be paid? Kindly suggest.

Dear Worthy Members,

I have attached herewith the Judgment of Madras High Court known as the Mettur Beardsell Ltd. Case, wherein Hon'ble Justice Abdul Wahab clearly stated that a person who had been in the service of an organization for 240 days or more in the fifth year is eligible for Gratuity. Hence, when an employee completes 4 years and 240 days in the fifth year, he is legally considered to have completed 5 years for the purpose of eligibility for gratuity.

Even here in Delhi, you can claim Gratuity by applying the same principle given under the Madras High Judgment on the subject. Even if a company is managing its trust, it cannot make its own rules to govern the trust. It can give more but not less than what is prescribed under the Act.

Dear Sameer,

I advise you to serve a notice to the employer in Form "I" demanding the amount of Gratuity. In case no reply is received or your claim is rejected, approach the Controlling Authority under the PG Act. The Assistant Commissioner of Labour is the proper authority. File your claim in Form "N" together with documents such as the Appointment letter, salary slip, notice, etc. I am sure you will get your claim. You are certainly eligible for Gratuity, and so is Sudhir.

Also, please ensure first that the Payment of Gratuity Act "Must" be applicable to your organization, which is applicable to every factory, mine, oilfield, plantation, port, and railway company; and every shop or establishment within the meaning of any law for the time being in force in relation to shops and establishments in a State in which ten or more persons are employed, or were employed, on any day of the preceding twelve months.

Feel free to revert in case of any doubt.

Regards