Gratuity in Punjab: How Long Do You Need to Work to Be Eligible?

Gratuity Eligibility Query

I have a query related to gratuity. If a person is working in the manufacturing industry in Punjab for a continuous period of 5 years and 3 months, then how many years and months of gratuity is he eligible for? Also, if he works for 5 years and 9 months, then how many years and months of gratuity is he eligible for? Please guide me with your valuable knowledge.

Thank you,

Regards

Section 4(2) of the POG Act states that gratuity is payable to the employee for every completed year of service or part thereof in excess of six months. This means that less than 6 months will be ignored, and more than 6 months will be considered as a full year.

In your illustrations, 5.3 years will be considered as 5 years, and 5.9 years as 6.

Dear Friends,

I need clarification on one issue. In a specific case, an employee has completed 5 years of service but has worked less than 240 days in the 3rd year (let's say 160 days). Can the 3rd year be excluded for the purpose of calculation, or is the employee still eligible for the full 5 years? This query arises from the provision in sec 2A (2) ii of the POG Act, which defines continuous service as requiring 240 days to be worked in a year.

Many thanks.

Best regards,
M Khan

Our learned member, Mr. K.A. Korgaonkar, has provided a sufficient reply to your second question. More than six months after five years shall be regarded as one year for accounting purposes.

Additionally, 240 days of working is only considered for eligibility purposes for payment under the POG Act.

Gratuity Eligibility Under the Payment of Gratuity Act, 1972

In the entire length of his/her qualifying service for gratuity, any employee would be entitled to gratuity only in respect of the years in which he/she has completed 240 days of service as per Sec. 2-A of the Payment of Gratuity Act, 1972. In the example cited by Mr. Khan, the incumbent is not entitled to gratuity for the 3rd year of service as his continuous service in that particular year amounts to only 160 days. Therefore, out of the total 5 years of service, excluding the third year, the employee is entitled to gratuity for the remaining 4 years only.