Understanding Gratuity: What Happens in Cases of Employee Death or Permanent Disability?

I have two questions:

1. Suppose an employee joined a company on 01.01.2011 as a regular employee and died on 03.01.2011. Will he be eligible for Gratuity? If he is eligible, what will be his gratuity amount, and how is the gratuity amount calculated in this type of case?

2. Whether an employee, due to an on-duty accident, became Permanently Totally Disabled and will never be able to work again, be eligible to receive Gratuity even if they have not completed 5 years of continuous service? If yes, what will be the procedure for the calculation of Gratuity?

Please reply with Section and case reference (if any) for both cases.

Regards,
Jawed Alam

Gratuity Eligibility in Cases of Death and Disability

The same matter has been discussed earlier. In the case of death and total disability, the employee should be paid gratuity at the rate of 15 days' salary for the completed years of service, and the completion of five years of service is not required. Here, the issue is that the deceased had not even completed one year of service. Had he completed at least six months of service, the dependents or the employee totally disabled should have received 15 days' salary calculated at the rate of one year of service. Since there seems to be no court ruling in support, we have to rely on principles of natural justice and pay the same amount for less than six months as well.

Gratuity and Disablement

For getting gratuity, the disablement need not be while on duty. If the accident had taken place while on duty, he would be eligible for compensation as per the Employees' Compensation Act, and that is not based on service but on some factors which will vary according to the age of the employee and his last drawn salary.

Regards,
Madhu.T.K

Dear Madhu T.K, Thank you for your reply. During my recent interview, I was asked two questions to which I responded similarly to your suggestion. However, my answers did not satisfy them, and they requested references to specific sections of the Payment of Gratuity Act or any relevant case law. Do you have any insights or examples with section or case references that could help me address their queries effectively? Your assistance would be greatly appreciated. Thank you.

I am still not clear. Please explain to me again. If an employee dies and has not completed 5 years of service, are they still eligible for gratuity?

Eligibility for Gratuity in Case of Death

In death cases, completion of five years of service is not required. This means the dependents of the deceased employee can receive gratuity even if the employee had not completed five years of service.

Regards,
Madhu.T.K

Dear sir,

My brother passed away on the factory premises in an accident. The factory is providing compensation, and I would like to apply for the gratuity.