Gratuity Eligibility: Does a Stipend Year Count Towards Service Tenure?

Gratuity Eligibility for Stipend Year

Suppose an employee provides service for 6 years, during which the first year was spent receiving a stipend. My question is whether the first year is to be considered for gratuity, or if gratuity will only be paid for 5 years.

Regards,
Manoj Pandey

Referring to the Payment of Gratuity Act, he wasn't an employee earlier while he was drawing a stipend. In my view, his service for the stipend period will not be considered for gratuity.

Section 2(e) of the Act

Section 2(e) of the Act states below:

(e) "employee" means any person (other than an apprentice) employed on wages, in any establishment, factory, mine, oilfield, plantation, port, railway company, or shop, to do any skilled, semi-skilled, or unskilled, manual, supervisory, technical, or clerical work, whether the terms of such employment are express or implied, and whether or not such person is employed in a managerial or administrative capacity, but does not include any such person who holds a post under the Central Government or a State Government and is governed by any other Act or by any rules providing for payment of gratuity.

Regards,

If the employee is receiving a stipend under The Apprenticeship Act, with a written contract between the Manager of the Trainer (the company) and the Government, he/she shall not be eligible for consideration of gratuity. Otherwise, he/she is eligible to receive gratuity for 6 years.

Hope this information addresses your query.

Regards,
V K Sharma
Tarapur

Apprentices and Gratuity Eligibility

An apprentice referred to in the act must be an apprentice under the Apprentice Act or as defined specifically under the standing orders. In any other case, the fact that he is paid a stipend is immaterial. He will be eligible for gratuity for that period.

Though if we look at it from the Apprentice Act, a stipend is different from a salary. An apprentice is different from an employee. However, I would wish that you clarify if the title given was related to the apprentice and if he/she was covered under the Apprentice Act. If yes, then he is not covered under the Gratuity Act since gratuity is applicable to all employees who are receiving wages or salaries. If, however, you are just renaming the compensation he/she received as a stipend but included all the normal components as any other employee, deducted PF and other statutory contributions as in other employees, then though he was paid a stipend, he was treated at par with employees and hence eligible for gratuity for that period as well. Hope this was able to clarify your doubt.