Confused About Gratuity Calculation: Should I Count 8 or 13 Years? Can You Help?

Gratuity Calculation Issue

I am working in HR at an engineering company, and I have a problem with gratuity calculation. Below is the data for the working days and gratuity years:

Year Working Days Gratuity Years
2001 255 1
2002 245 2
2003 250 3
2004 242 4
2005 245 5
2006 250 6
2007 105 7
2008 15 8
2009 235 9
2010 220 10
2011 202 11
2012 245 12
2013 242 13

I am confused about how many years to calculate, either 8 or 13. Please help me.

Regards,
Avadhut

Clarification on Gratuity Calculation

Why is there confusion? It should be 13 years. How did you arrive at 8 years? I hope that you have not deducted 5 years from the total 13 years of service. If so, then it is incorrect. The requirement of 5 years of continuous service is only for eligibility. Those who complete 5 years are only eligible. Once an employee completes 5 years, they are entitled to gratuity, and the calculation will be for the full 5 years. In essence, it should be calculated from the start of their service to the end of their employment.

"Year" means not working 365 days. For every year of service completed, it should be considered as a year of service, and the definition of continuous service includes all approved leaves, holidays, and week offs.

Only for the last year of service, if an employee has completed 240 days of continuous service including week offs, approved leave, and holidays, it should be considered as 1 year. So, you should pay gratuity for 13 years.

For details, please visit http://speakhr.blogspot.in/2013/06/gratuityact.html?m=1.

Gratuity Entitlement Based on Continuous Service

If an employee in a particular year has no continuous service as defined under section 2A, he is not entitled to gratuity for that year.

Regards,
Varghese Mathew

Gratuity Eligibility Calculation

For the purpose of eligibility for gratuity, in the preceding year, i.e., twelve months, of the year for which the calculation is being made, the employee should have 240 working days. In 2013, there were 242 working days. Hence, the calculation will be made for 13 years.

If you had issued an order treating the absence as a break in service as per clause (1) of section 2A of the Act, and the employee does not have 240 days of working in any year after considering all the allowed contingencies, you need not pay gratuity for that year.

Regards

Before giving any reply to your query, it is important to know the reasons for the shortfall in your service during the years 2007, 2008, 2009, 2010, 2011, and 2013. The 'Continuous Service' has two parts as defined in Section 2A of the PG Act, 1972. We need to determine whether the service shortfall during the mentioned years was due to sickness, accident, leave, absence from duty without leave, and whether any order has been issued treating your absence as a break in service according to the company's norms.

In my opinion, if you have not rendered continuous service due to your fault, you will not be entitled to payment of gratuity for the years mentioned in the preceding paragraph. I welcome reactions to my views from my seniors.

Regards,
BS Kalsi
Member since Aug 2011