Am I Eligible for Gratuity After 4 Years and 8 Months in a PSU? Seeking Advice

Hi, I have completed 4 years and 8 months in a PSU company governed under the Payment of Gratuity Act 1972. Am I eligible for gratuity? I have gone through an article which says that eligibility for payment of gratuity is 5 years. The quantum of service will be considered a full year if someone has completed 6 months or more than that. Please advise me regarding my eligibility for the payment of gratuity.

Though the Payment of Gratuity Act has not been amended, as per the latest Supreme Court ruling, you are eligible for gratuity.

Hi Meenakshi, I have completed 4 years and 7 months (i.e., 9th April 2007 to 25th October 2011) working in the retail industry in Mumbai. Am I eligible for gratuity? Please direct me.

Thanks,
Meenakshi

Gratuity Payment Calculation

I want to know what the calculation is for gratuity payment. Only the 5th year, with 240 working days, would be considered for gratuity payment. Suppose somebody did not complete the minimum 240 days working criteria in their previous 4 years; then, he/she will be eligible for the gratuity amount after completing his/her 5 years of working.

Thanks and Regards,

Raj Asiwal

Contact No. [Phone Number Removed For Privacy Reasons]

As per the Gratuity Act, eligibility for gratuity is 4 years + 240 days in the 5th year. Since you have completed 8 months in the fifth year, it means (8 months X 30 average days per month = 240 days), making you eligible to receive the gratuity.

Regards,
Manohar

You have to complete a full 5 years of service for gratuity purposes. In the case of Madras State, 4 years and 6 months or above will be counted as 5 years of service because the High Court has given a verdict to that effect.

Regards,
D. Gurumurthy
HR/IR Consultant

Though you have completed 4 years and 8 months, it will be treated as 5 years of continuous service. Therefore, you are eligible to claim Gratuity.

This is to inform you that not only the Madras High Court but also the Honorable Supreme Court has issued a judgment confirming that if an employee has worked for 240 days in the 4th year, they are eligible for gratuity. Although the Payment of Gratuity Act has not been amended, denying any employee gratuity if they have worked for 4 years and 240 days may lead to future litigations for the organization.

Regards,
Kamal

I am a little bit confused about working days. Some seniors say that in the 4th year, 240 days are compulsory for gratuity, while others say it's the 5th year with 240 days. I would like to know the correct information regarding this.

Thanks and Regards,
Raj Asiwal

Continuing service for all five years is applicable for gratuity. The past five years of service should not be broken up as per the standing rule.

Thanks,
Sanjeev Rai

Eligibility for Gratuity

For a claim of gratuity, 5 years should be completed; otherwise, you are not entitled to gratuity.

Regards,
Rajvir Singh Beniwal
HR Manager
Wings Biotech

Gratuity Eligibility Clarification

Five years of service is a must to get gratuity. In one case, the Madras High Court has given a judgment that if an individual completes 240 days in the fifth year, then they become eligible to get gratuity.

On the basis of one judgment, we cannot override the Payment of Gratuity Act, where it is clearly mentioned in the applicability clause that it is for five years. There should be an amendment in the act to make it applicable after four years and 240 days. We are just confusing each other without a valid reason.

Can anyone tell where it is written in the act about applicability after four years and 240 days in the fifth year? We are just confusing with one judgment of the High Court.

Dear Mr. J. S. Malik,

Supreme Court Ruling on Gratuity Eligibility

It's not only the Madras High Court, but the Hon. Supreme Court has also ruled that if an employee has completed 240 days in the 5th year of their service, they are eligible for gratuity.

"Judgment from Supreme Court:

"Yes, by virtue of the judgment of the Supreme Court rendered under the provisions of the Industrial Dispute Act in Surendra Kumar Verma vs. Central Govt. Industrial Tribunal, [(1980) (4) S.C.C.433)], it is enough that an employee has a service of 240 days in the preceding 12 months, and it is not necessary that they should have completed one whole year's service. As the definition of continuous service in the Industrial Dispute Act and Payment of Gratuity Act are synonymous, the same principle can be adopted under the act also, and hence an employee rendering service of 4 years 10 months 11 days is considered to have completed 5 years of continuous service under sec.4(2) and thereby is eligible for gratuity."

It's true that the Payment of Gratuity Act has not been amended to accommodate the judgment of the Hon. Supreme Court, but at the same time, judgments passed by the Hon'ble Supreme Court of India become law as per Article 141 of the Constitution of India.

Amendments and References to Supreme Court Judgments

We should also not forget that when the Payment of Gratuity Act was amended in 2009 to redefine/widen the term "EMPLOYEE," the amendment bill (introduced in Parliament) gave a clear reference to the Supreme Court judgment of 2004 in which the court had widened the definition of the term 'employee.' The act was amended just to accommodate the court ruling.

Not only that, though the act was amended and notified in the Gazette of India in 2009, it was effective from 3rd April 1997 just because the case "Ahmedabad Private Primary Teachers' Association vs. Administrative Officer and others," in which the Supreme Court gave said judgment, was started in 1997.

Current Status and Ongoing Discussions

So we just can't say that members are discussing the topic without any valid reason. Until the act is amended and notified, people will keep discussing the topic as the present status of the act on eligibility criteria is confusing. People are taking it both ways.

Regards,
Kamal

As per Sec. 2A(2)(a)(ii) of The Payment of Gratuity Act, an employee who worked for 240 days in a year is eligible for gratuity. The High Court of Madras decision (1998 LLR 1072 MADRAS) in this regard is attached.

I agree with all your interpretations and judgments, but until there is an amendment in the act, the applicability remains at 5 years. Even LIC, which holds a major share of the gratuity policy, does not pay if it is less than five years.

As for the interpretation of continuous service after 240 days, I absolutely agree. As of now, it is not mentioned in the act, and no one pays before completing 5 years.

Dear Shri Ahankari Ji,

Gratuity Scheme Applicability to Schools/Trusts

The Payment of Gratuity Act, 1972, was amended in 2010 to include teachers in the definition of employees. Now, all teachers are eligible for the payment of gratuity.

Thanks & regards,

I need help in the matter of whether gratuity is secured or not. This information is required for the purpose of claim settlement in relation to the liquidation or winding up of a company. If there is any relevant judgment, please provide a reference.

Regards,
Deepak
[Phone Number Removed For Privacy Reasons]

Can we have the scanned copy of the Hon. Supreme Court Judgment confirming that if the employee has worked for 240 days in the 4th year, he is eligible for gratuity?

Thanks, and an early response will be appreciated.

Regards,
Ganesh

I do not have the original scanned copy of the SC judgment. If you want the same, please apply for a certified copy by providing the case number details from the copying branch of the SC.

Alternatively, please go through the law book "The Payment of Gratuity Act, 1972" published by Law Publishers Pvt. Ltd., 18A-S.P. Marg, Post Box-1077, Allahabad-211 001.

I have completed 3 years in the same organization; however, I was on leave without pay for 2 months as I was on maternity leave (3 months paid by the organization + 2 months extra without pay). My question is how my gratuity days will be calculated. Would it be 5 years from the day I joined the organization or 5 years + 2 months?

Hi, I have completed 4 years and 9 months in the company and have resigned from it. My company refuses to pay me my gratuity as they say that these 240 days are counted as working days only, and no Sundays or any leave taken into account. Please advise.

Regards,
Pankaj

I have completed 3 years in the same organization; however, I was on leave without pay for 2 months as I was on maternity leave (3 months paid by the organization + 2 months extra without pay). My question is how my gratuity days will be calculated. Would it be 5 years from the day I joined the organization or 5 years + 2 months?

Thanks!

The Payment of Gratuity Act, 1972 prescribes five years of continuous service for being eligible for the payment of gratuity. Since there is no break in service for a two-month duration on account of postnatal leave without pay, you are eligible for gratuity from the date of your joining, including the period of postnatal LWP. However, the calculation of the qualified period of service would certainly differ, but it would not affect your amount of gratuity as any period in excess of six months is to be rounded off to the next full year. So, the actual period of qualified service of 4 years and 10 months would be rounded off to 5 years. Mothers may avail of any kind of leave after delivery for the welfare of the newborn, and such postnatal leave is universally recognized as leave on a valid ground. I see no hurdle in your getting gratuity if you are planning to leave the job immediately after completing 5 years of duration, including maternity leave + postnatal leave without pay.

Thanks & regards,

Please note that to claim gratuity, 5 years should be completed. If you have completed more than 6 months in addition to the 5 years, it will be counted as 1 year. This means if you have completed 5 years and 7 months, you will get gratuity for 6 years.

Thanks,
Rajvir Singh Beniwal
HRD Manager

Dear Seniors, I worked for a private limited company from 19/02/2010 to 08/11/2014, with a total working period of 4 years, 7 months, and 8 days. Am I eligible for gratuity or not?

Regards,
Jagannath Pandit

Your information is appreciated. However, would you please refer to the supportings in Act 1972?

Gratuity Eligibility According to the 1972 Act

In fact, the Gratuity eligibility as per 1972, if we interpret with respect to Sec 2A "the definition of Continuous Service" and Section 4 "the payment of Gratuity for 5 years Continuous Service," was the basis of the verdict given by Madras HC. If you or any others have any comments, please.

Regards

If the gratuity amount comes under Cost To Company (CTC), can this follow Act 1972?

Hi,

I have completed 4 years and 8 months (from 01/04/2009 to 17/12/2015). Am I eligible for gratuity? I have gone through an article which says that eligibility for payment of gratuity is 5 years. Quantum of service will be considered a full year if someone has completed 6 months or more than that. Please advise me regarding my eligibility for payment of gratuity.

Thanks,
Leena

Any employee who has completed his 5 years of service in a company is entitled to Gratuity benefits. Additionally, if an employee has completed 4 years and 9 months, they are not entitled to Gratuity. Generally, during the calculation of Gratuity, if an employee has completed 5 years and 6 months, it will be considered as 6 years for rounding off; otherwise, those with less than 5 years are not eligible for Gratuity payment. I hope you find this information helpful. Thank you.

Hi, I hope you are fine.

Regarding the Payment of Gratuity Act, it is clearly explained that any employee who has completed 5 years of service in a business concern is eligible for gratuity; otherwise, not. In your case, you are not eligible for gratuity. I hope my explanation satisfies you.