Layoff - Gratuity & Compensation

Dear All
I have a query regading Gratuity & compensation in relation to a lay-off.
An employee has completed 4 years and has entered the 5th year. The employer advises to leave the job just after 4th year is completed.
The reason cited is that the SBU is making loss, so quite a few of the employees have to be reduced and they have to resign.
The employees are not being terminated officially as he employer wants that it should appear these people have resigned from the job to avoid any legal issues.
Are such employees, eligible for gratuity?
Looking forward to your suggestions
Regards

Dear Mr.Shan
The employees are not entitled for gratuity as they have not completed five years of continuous service.
With regards

NO, even if they have worked for 4 year 11 Months and 20 Days they are not eligible for Gratuity.
You Must complete your 5 years then only you become eligible for Gratuity
I hope this might help you

Dear Vandanajasmalik
There is a judgment of the Madras High Court on this issue. It is available in this forum
With regards

In fact I had mis-quoted here. This situation cannot be a LAY-OFF. This is basically a silent RETRENCHMENT. I suppose it can officially be called a Retrenchment only if the employer had posted a NOTICE OF RETRENCHMENT.
Since the employer wishes not to compensate rightfully, he says these people to look for a job elsewhere in month's time WITHOUT GIVING ANY NOTICE from his side. It is clearly a Retrenchment minus the employer's notice.
In this regard I look forward to your suggestion -
1. Since these employess have to be released, What should be done to make it a Retrenchment?
2. Is Retrenchment nad its benefits applicable for executives?
3. What are the applicable retrenchment benefits?
4. How does the Retrenchemnt process begin?
5. Will it be wise to prefer a Retrenchment, or simply resign serving 1 month's notice from the Employee's side to the Employer?
Please guide...

Dear Mr.Shan

If the employee resigns then it cannot be called to be a retrenchment because, retrenchment is the termination of the services of a workman for any reason excepting the exceptions mentioned in section 2(oo) of the Industrial Disputes Act.

If the workmen are released without a resignation letter from them the action of the employer becomes retrenchment.

The Industrial Disputes Act defines the term "workmen". All workmen are entitled for retrenchment compensation if they are retrenched. The designation given to an individual worker does not determine whether he is a worker as defined under the Industrial Disputes Act. The nature of work done by him determines whether he is a worker as defined under the Indsutrial Disputes Act or not.

If a worker is retrenched he is entitled to one month notice or wages for one month in lieu of notice and retrenchment compensation at 15 days average pay for every completed year of service.

From the employer's point of view, resignation is the ideal. From the worker's point of view if he is retrenched, he will get monetary compensation at the rates specified.

With regards

Dear harikrishanan Sir
There is one judgement of madrad high court where he agrees to pay gratuity
if someone has completed 240days in fifth year.That judgement is applicable to that particular case only and our bible is gratuity act which clearly says that you should five years of service to become eligible for gratuity.So i feel
vandana is right.
Even you can see when we insure our gratuity through LIC they also did not pay Gratuity if someone has not completed 5 years.

Dear Mr.J.S.Malik
I request you to go through the judgment of the Madras High Court in Mettur Beardsells case thoroughly. LIC of India has to act according to the provisions of the Payment of Gratuity Act and the interpretations placed on that Act by the various High Court and the Supreme Court. LIC of India cannot interpret the law.
With regards