Gratuity Eligibility: Can 4 Years and 8 Months of Service Qualify for Benefits?

Gratuity Eligibility Criteria

What are the criteria for gratuity? If an employee has worked for 4 years and 8 months, are they eligible for gratuity? If yes, could you please provide the amended Gratuity Act of 2011 so that it can be shown to the management as proof if required?

I request your prompt feedback on this matter.

Thanks in anticipation,

Regards,
Yogita

The minimum period that needs to be served to be eligible for gratuity is 5 years. There are no new amendments on this. Therefore, in this case, the employee is not eligible for gratuity. If that employee is a performer and you want to retain him/her, you can use this point at the time of the exit interview.

Please find the details below.

Clarity Between Gratuity Eligibility Service (5 or 4.8 years)?

The gratuity eligibility service as per the Gratuity Act 1972 is 5 years. However, as per the judgment from the Supreme Court and the quotation from the book mentioned below, it seems that the gratuity eligibility service is 4 years and 240 days.

Judgment from the 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 he should have completed one whole year's service. As the definition of continuous service in the Industrial Dispute Act and the 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, and 11 days is considered to have completed 5 years of continuous service under sec.4(2) and thereby is eligible for gratuity."

Quotation from the Book:

Law Book (Bare Act, 2004) i.e., The Payment of Gratuity Act, 1972 (Publisher: Law Publishers () Pvt. Ltd. 18A-S.P. Marg, Post Box-1077, Allahabad-211 001. Phone: 623735, 623741 Fax-0532-622276. Website: lawpublishersindia.com)

1. 4 years and 6 months (190 days = 1 year) where the company follows a 5-day week.
2. 4 years and 8 months (240 days = 1 year) where the company follows a 5-day week.

Is eligible for gratuity. The Payment of Gratuity (Second Amendment) Act, 1984 clarifies this. One needs to calculate the number of years and service completion as follows.

A Company Which Follows a 5-Day Week

DOJ 1.05.2000 -

01.05.2000 to 30.04.2001 - worked for 190 days

01.05.2001 to 30.04.2002 - worked for 190 days

If we go by the above formula and if the person does not have any break in service, they will be eligible for gratuity on 01.11.2004.

The lack of clarity on this rule has created confusion among many employees, as some hear that some companies are following the 4 years and 240 days rule, while others follow the 5-year rule. Please help remove this confusion so that nobody's rights to gratuity are compromised. An expert lawyer may please give their comments and advice.

Regards.

Hi Yogita, please find the details below.

Clarity Between Gratuity Eligibility Service (5 or 4.8 Years)?

The gratuity eligibility service as per the Gratuity Act 1972 is 5 years. However, according to a judgment from the Supreme Court and a quotation from a book, it seems that the gratuity eligibility service is 4 years and 240 days.

"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 he 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. Hence, an employee rendering service of 4 years, 10 months, and 11 days is considered to have completed 5 years of continuous service under sec.4(2) and thereby is eligible for gratuity."

Quotation from the book:
Law Book (Bare Act, 2004) i.e., The Payment of Gratuity Act, 1972 (Publisher: Law Publishers () Pvt. Ltd. 18A-S.P. Marg, Post Box-1077, Allahabad-211 001. Phone: 623735, 623741 Fax-0532-622276. Website: lawpublishersindia.com)

1. 4 years and 6 months (190 days = 1 year) where the company follows a 5-day week.
2. 4 years and 8 months (240 days = 1 year) where the company follows a 5-day week.

These are eligible for gratuity. The Payment of Gratuity (Second Amendment) Act, 1984 clarifies this. One needs to calculate the number of years and service completion as follows:

A company which follows a 5-day week:
- Doj 1.05.2000 -
- 01.05.2000 to 30.04.2001 - worked for 190 days
- 01.05.2001 to 30.04.2002 - worked for 190 days

If we go by the above formula and if the person does not have any break in service, they will be eligible for gratuity on 01.11.2004.

The lack of clarity on this rule has created confusion among many employees. Some companies follow the 4 years 240 days rule, while others follow the 5-year rule. Please help remove this confusion so that nobody's rights to gratuity are compromised. An expert lawyer may please give their comments and advice.

https://www.citehr.com/386609-gratui...ent-rules.html

Regards,

Clarity Between Gratuity Eligibility Service (5 or 4.8 Years)?

The gratuity eligibility service as per the Gratuity Act 1972 is 5 years. However, according to the judgment from the Supreme Court and the quotation from the book cited below, it seems that the gratuity eligibility service is 4 years and 240 days.

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 he should have completed one whole year's service. As the definition of continuous service in the Industrial Dispute Act and the 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, and 11 days is considered to have completed 5 years of continuous service under sec.4(2) and thereby is eligible for gratuity."

Quotation from the Book:

Law Book (Bare Act, 2004) i.e., The Payment of Gratuity Act, 1972 (Publisher: Law Publishers () Pvt. Ltd. 18A-S.P. Marg, Post Box-1077, Allahabad-211 001. Phone: [Phone Number Removed For Privacy Reasons] Fax: [Phone Number Removed For Privacy Reasons]. Website: lawpublishersindia.com)

1. 4 years and 6 months (190 days = 1 year) where the company follows a 5-day week.
2. 4 years and 8 months (240 days = 1 year) where the company follows a 5-day week.

Is eligible for gratuity. The Payment of Gratuity (Second Amendment) Act, 1984 clarifies this. One needs to calculate the number of years and service completion as follows.

A Company Which Follows a 5-Day Week

DOJ 1.05.2000 -

01.05.2000 to 30.04.2001 - worked for 190 days

01.05.2001 to 30.04.2002 - worked for 190 days

If we go by the above formula and if the person does not have any break in service, they will be eligible for gratuity on 01.11.2004.

The lack of clarity on this rule has created confusion among many employees. Some hear that some companies are following the 4 years and 240 days rule, while others follow the 5-year rule. Please help remove this confusion so that nobody's rights to gratuity are compromised.

* If you know any lawyer, you may discuss this matter with them.

Is it compulsory that 240 days should be working days only? Does it include Sundays and additional holidays like 15th August, Rakshabandhan, or is it excluding all of these? Please clarify.

Thanks in anticipation,

Regards,
Ms. Yogita Panjwani