Understanding Gratuity Eligibility for Employees Who Pass Away Before 5 Years of Service

We would like to know the gratuity eligibility for death cases. As per the act, employees are entitled to gratuity subject to the completion of 5 years or 240 days in a year.

Gratuity Eligibility in Death Cases

We would like to know for a death case scenario whether the employees are entitled to gratuity if they have less than 5 years of service. If so, in our company, one of our employees died with exactly 6 months of experience. Is he eligible for the gratuity as per the act?

We want to know the minimal number of years' experience onwards gratuity is applicable for death cases. Please advise.

Regards,
Janakiraman

Gratuity Eligibility for Death or Disablement

On the death or disablement of an employee due to an accident or disease, the completion of continuous service of five years is not necessary for gratuity eligibility. This provision ensures that employees or their families are entitled to gratuity benefits even if the employee has not completed five years of service, provided the termination is due to death or disablement.

Regards,

If the deceased employee has completed 6 months of working, then please pay his legal heirs one year of Gratuity Amount.

According to Section 4(1) of the Payment of Gratuity Act, there is no need to fulfill the condition of 5 years of continuous service, and the same is reproduced for your reference:

Section 4: Payment of Gratuity

(1) Gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years:

- (a) on his superannuation, or
- (b) on his retirement or resignation, or
- (c) on his death or disablement due to accident or disease:

Provided that the completion of continuous service of five years shall not be necessary where the termination of the employment of any employee is due to death or disablement.

Provided further that in the case of death of the employee, gratuity payable to him shall be paid to his nominee or, if no nomination has been made, to his heirs. Where any such nominee or heir is a minor, the share of such minor shall be deposited with the controlling authority who shall invest the same for the benefit of such minor in such bank or other financial institution, as may be prescribed, until such a minor attains majority.

Hope this clarifies your query.

Regards

Gratuity Eligibility for Death Cases

Sh Kamal Kant is correct in saying that the completion of continuous service of five years shall not be necessary where the termination of the employment of any employee is due to death or disablement. Firstly, the question arises here whether the deceased employee, who has put in hardly six months of service, his/her nominee will be eligible for the payment of gratuity. Your other query about the minimal number of years' experience for death cases for the eligibility for gratuity is relevant to the first query. The answer to both queries is the same: the deceased employee must have put in at least six months of continuous service in the establishment to make his/her nominee eligible for the claim of payment of gratuity for one year. The deceased employee must have worked at least 120 days in a period of six months. All the authorized leaves, periods of lay-off, absence due to temporary disablement caused while on duty, and maternity leave (in the case of female employees) shall be counted while computing 120 days. Continuous service has been defined in Section 2A of the Payment of the Gratuity Act, 1972.

Regards,
BS Kalsi