Gratuity Applicability [Thread 369130]

Good morning all Seniors
Though I am aware that Gratuity is applicable only after completing 5 yrs of service with one employer, I have recently heard from my peers that it is applicable even after completing 4 yrs and 5 months or so.
Is it true? Is there any law regarding the same. Pl guide

Dear Preeti,
According to Payment of Gratuity Act 1972 you are eligible after completion of 5 Years.
With Regards,
Vineet Deshmukh

Some companies now also follow the rule that in the 5th year, employee needs to have worked for 240 days to become eligible for gratuity. So as far as I understand, it is 4 years and 240 days.

Dear Preeti,
In our organisation we give gratuity for members who have completed 4yrs and 8months, the one as mentioned by Mr.Balaji.
Warm Regards,
Lydia

Dear Preeti,
It is true that you will get eligible for Gratuity after 4 years and 240 days as it will be 5 complete years of service. Serving any company for 240 days is considered as 1 completed year of service. so 4 years and 240 days = 5 years of service = Eligible for gratuity.
Hope this simple thing will clear all your doubts.

Dear Friends,
Please be very clear that Gratuity is applicable only after completion of 5 years and not even one day shortage is acceptable as per Gratuity Act. People get misguided by Madras High Court Judgement.
The Payment of Gratuity Act is not amended yet. It is applicable only after completion 5 full yers of servie.
The 240 days+ calculation are all from 6th year of service onwards (ofrourse in the same Organization).
So let us get confused on this issue.
Best wishes,
Sundararaman

Dear Preeti,
The law states very clear. An employee is eligible for gratuity on completion of 5 years of service calculated exactly from the date of joining.
Only after satisfying the eligibility criteria, the question of service period calculation arises. It is +1 year if the employee has completed 6 months of service in subsequent year.

Further, there is no law stating that 240 days = 1 year of service.
The concept of 240 days or two third attendance (since 240 days = two thirds of 365 days i.e. 1 year) is purely to calculate the eligibility criteria for an employee to avail the EL earned by an employee during his 1st year of service with an establishment.
Regards
Vimal Radia
+91 96625 48601

Vimal,
What about if the partnership company closes down, when I have worked only for 4 years and six months or say am short of 5 years work ???? Am, I eligible for gratuity ???

Dear Vimla,

Please take time to read the Gratuity Act itself. the definition of the term “continuous service” in Section: 2 Definitions is as below

Section: 2

Definitions.(b) “completed year of service” means continuous service for one year;

[2] [(c) "continuous service" means continuous service as defined in section 2A;]

Section 2A itself is defined as below

Section: 2A

Continuous service.

For the purposes of this Act, -

(1) an employee shall be said to be in continuous service for a period if he has, for that period, been in uninterrupted service, including service which may be interrupted on account of sickness,

accident, leave, absence from duty without leave….

(2) where an employee (not being an employee employed in a seasonal establishment) is not in continuous service within the meaning of clause (1), for any period of one year or six months, he shall be deemed to be in continuous service under the employer -

(a) for the said period of one year, if the employee during the period of twelve calendar months preceding the date with reference to which calculation is to be made, has actually worked under the employer for not less than -

(i) one hundred and ninety days, in the case of an employee employed below the ground in a mine or in an establishment which works for less than six days in a week; and

(ii) two hundred and forty days, in any other case;

As per this definition, 240 days of service should be considered as one year of continuous service.

Please don't get distracted by any other saying.

there are a lot of judgement to this effect. one cited below:

mettur beardsell ltd madras vs regional labour commissioner(central),madras,1998 LLR1072(madras high court)

My reasons for saying so are above given. Please educate me if i am wrong.

Dear Aniamin,
I am sorry to tell that such case is not eligible for gratuity.
Regards
Vimal Radia
+91 96625 48601