Am I Eligible for Gratuity After 4 Years and 8 Months? Seeking Advice on Calculation and Eligibility

Hi Team, I have read the discussions here, and I must say the professional guidance is awesome. My Date of Joining (DOJ) in the organization (a leading MNC) was 15/04/2008. I intend to leave the organization on the 31st of December, which will include my notice period. Thus, I will have completed 4 years, 8 months, and 16 days, including the notice period.

Gratuity Eligibility Inquiry

Am I eligible for gratuity? If yes, what is the calculation formula for the same that will give me a rough estimate of the amount? If not, what should be my last working day to qualify for gratuity?

Looking forward to a favorable response.

Regards, Aroop

I have read the discussions here, and I must say the professional guidance is awesome. My date of joining (DOJ) in the organization (a leading MNC) was 15/04/2008. I intend to leave the organization on the 31st of December, which will include my notice period. Thus, I will have completed 4 years, 8 months, and 16 days, including the notice period.

Eligibility for Gratuity

Am I eligible for gratuity? If yes, what is the calculation formula for the same that would give me a rough estimate of the amount? If not, what should be my last working day to qualify for gratuity?

Looking forward to a favorable response.

Regards,
Aroop

Hi Prashant, you mean to say I need to complete 5 years and 4 months? As per my knowledge from this forum, 4 years and 8 months should be enough.

Yes, Mr. Prashant. The management has to pay gratuity to employees who have completed 5 years of service. If a person completes 4 and a half years, they are eligible for gratuity. The calculation is as follows:

Gratuity Calculation Formula

s = 15/26 * last month's salary (Basic + DA) * number of years of service

Thank you for your valuable response. So I'm eligible for the gratuity for 5 years of service. When can I apply for the same and where do I contact for it? Can my company's HR help me with this? Can they deny the claim stating that 4 years and 8 months are not eligible? Where should I appeal if they do so?

As per the Gratuity Act, it is mandated that an employee shall be deemed to have completed one year of service if they have worked for 240 days in that particular year. In your case, since you will be working until December 31, 2012, you will complete 240 days of the fifth year of service. Hence, the company is liable to pay you the gratuity amount due as per the formula mentioned in the Gratuity Act. A document clarifying the concept of working days is attached, reflecting the view taken by the Supreme Court regarding the interpretation of continuous service.

I hope this helps.

Regards, Umesh

As per the Gratuity Act of 1972 and the Gratuity Act (amended) of India 2010, more than six months should be counted as a full year. You are eligible for 5 years of gratuity, and your company can't say no to it. Once the Act becomes applicable in the company, they should follow the gratuity rules. If not, you have the right to ask or meet concerned departments (e.g., Labour Court).

Regards

As per a recent Supreme Court judgment, the eligibility for gratuity is 4 years and completion of 240 days in the last year.

You should complete at least 4 years and 240 days for gratuity. The calculation is as follows:

(Monthly Basic + DA / 30) * 15 * Number of years of service.

Regards,
Musa S
JFPL BGM

Gratuity Eligibility and Calculation

240 days equate to 8 months. Well, the completion of 5 years is still in effect and has not been amended. In the last year, the Madras High Court judgment stated that 4.6 years are sufficient for the calculation of Gratuity for continuous service, whether the employee resigned or retired. This judgment is applicable within the state, but it has not been incorporated or amended in the Gratuity Act as per the judgment. Therefore, 5 years of continuous service remains an essential condition to be eligible for gratuity.

Excluding the states where the Gratuity judgment applies, establishments in other states can only be required to pay gratuity when an employee completes a continuous service period of 5 years.

You are right, Gratuity is factored into the CTC, but it is not deducted from the Gross Salary. Companies add Gratuity to the Gross Salary as part of the CTC because they expect employees to work for them for an extended period.

If an employee works for five years and then leaves, the employer is required to pay Gratuity based on a specific calculation. This cost to the company is incurred for the employee, which is reflected today but paid out at a later time.

If I am mistaken in my understanding, please correct me or share your knowledge.

Thank you.

According to the Gratuity Act, one must complete a minimum period of service of 5 years in the organization to become eligible for gratuity under the Act. The rounding of over 6 months can be considered once an employee is eligible for gratuity. In your case, since you have completed 4 years and 8 months, you are not eligible for gratuity under the Act. However, there are cases where private organizations, not fully aware of the Act, make the payment of gratuity if an employee has completed 4 years and more than 6 months, considering it as 5 years.

Eligibility for Gratuity

As per the Gratuity Act, one must complete 240 days every year continuously for five years. If you have worked 240 days continuously for five years, then you are eligible for gratuity.

Gratuity Calculation

For calculation purposes, we need your last drawn basic salary to calculate the gratuity.

Calculation formula: basic / 26 x 15 x number of completed years of service.

Eligibility for Gratuity Under the Act

As per the provision of the Act, those who complete 5 years of continuous service will be eligible to claim gratuity. In your case, it does not apply. However, the Act does not prevent the employer from paying gratuity (the employer can pay in the name of ex-gratia instead of calling it gratuity) for those who complete less than 5 years.

Regards,
Murugesan R
[Email Removed For Privacy Reasons]

Dear Mr. Aroop,

Eligibility for Gratuity Under the Payment of Gratuity Act - 1972

With reference to your query on the above subject, please refer to Section 4 for the eligibility of an employee to receive gratuity under the provisions of the Payment of Gratuity Act - 1972 Rules. It means any employee who has rendered 5 years of continuous service at the time of leaving the organization, retirement, superannuation, or any contract between the employer and employee. The continuous service of 5 years is not required except in the case of death or disablement of the employee. For every completed year or part thereof in excess of six months, gratuity is payable at a rate of 15 days' wages last drawn by the employee. Continuous service means the employee has completed 240 days of work in a calendar year. In this connection, you are eligible to receive gratuity after 16/03/2013. Based on your resignation date, including the notice period, you are not eligible for gratuity.

For further information, please feel free to talk with me.

Thanks & Regards,

V R RAO PULIPAKA [Phone Number Removed For Privacy Reasons]

I have worked in a Gujarat state government company as a contract employee continuously for 3 years and 3 months without any single break in service. Am I eligible for gratuity? If yes, how much?

It is the obligation of the organization to pay you gratuity after you complete 4 years, 8 months, and 16 days as there have been no amendments in the act. To the best of my knowledge, there has been no judgment in your favor from the Supreme Court on this matter. You may refer to the decision of the Madras High Court, but you will need to pursue legal action to receive your gratuity if the company maintains the threshold of 5 years.

Regards,
Preetam Deshpande

I have worked in a Gujarat State Government company as a contract employee continuously for 3 years and 3 months without any single break in service. I joined on 09/06/2009 and was relieved on 08/11/2012. As I know, generally, 5 years of service is required to be completed for claiming gratuity. Am I eligible for gratuity? If yes, how much? My contract was not renewed only because of the commencement of the code of conduct after the election. The company may call me again. If I join again, will the services I have done in the past be calculated for claiming gratuity?

I have been working in a company for more than 5 years. I have completed 3 years in the main company and 2 years in the group company. To date, gratuity has not been given to me. Am I eligible for gratuity? Please clarify with recent judgments.

Understanding Gratuity Eligibility

Even though it has been relied on the Madras High Court judgment, the bare act concerning the payment of gratuity does not mention the number of days worked in a year as a criterion for eligibility. It only indicates the completion of 5 years of service. So, I believe all interpretations based on judgments should be considered only if you are not paid by your company. Hence, I am of the opinion that 5 years of service means 5 full years, without any consideration of the number of days.

As per the law, the minimum eligibility criteria is to complete 5 years of service. Thereafter, 5 years, 6 months, and a few days will make you eligible for the 6th-year Gratuity. Yes, but for eligibility for the first time, it should be a complete 5 years of service. Refer to the Gratuity Act for more details.

Thank you.

If you are retrenched from your company on the said date, you are eligible for gratuity, as per section 25F of the ID Act, 1947. If you are resigning from the organization, you may have to complete five years of service to become eligible for the payment of gratuity. For example, if your Date of Joining (DOJ) is 15.04.2013, you will be eligible for gratuity.

Calculation of Gratuity

Gratuity = (Monthly wage (Basic + DA) / 26) x 15 days x No. of completed years of service.

Hope this will clarify your doubts.

Regards,
P. Vathiraj