Retirement Dilemma: Is Our 58-Year-Old Employee Eligible for Gratuity After 3 Years?

An employee joined our organization at the age of 55 and is now approaching retirement after three years of service with us. Is he eligible for gratuity? Please let me know if you need further assistance.

No, he will be eligible for gratuity under the Payment of Gratuity Act. However, the employer can pay him ex-gratia.

As per the Gratuity Act, an employee should render continuous service for not less than five years to avail gratuity. Therefore, the employee is not eligible for gratuity.

Thank you.

As you are aware, as per the gratuity rule, an employee is entitled to gratuity upon completion of 5 years of service in a normal case. However, if the employee is asked to leave for any reason, even before completing 5 years but after 3 years of service, that employee is still entitled to gratuity.

Thank you.

As per the Payment of Gratuity Act, 1972, an employee should have rendered continuous service for not less than five years to avail of the gratuity. However, the completion of five years is not necessary where the termination of employment is due to death or disablement. Thus, the individual you have mentioned shall not be eligible for the payment of gratuity.

Regards,
BS Kalsi
Member since Aug 2011

Which of the rules (Central or State) states that if an employee is terminated or asked to leave upon completion of 3 years of service, then that employee is entitled to gratuity?

R.N. Khola
(M) [Phone Number Removed For Privacy Reasons]
Welcome Skylark Associates

I want to draw your attention to your yesterday's mail where you mentioned that "an employee is entitled to gratuity on completion of 5 years of service in a normal case, but if the employee is asked to leave or due to any reason, if an employee is dismissed after completing 3 years of service, then that employee is entitled to gratuity." I would like to clarify that an employee is not entitled to gratuity in a normal case, but only upon termination of employment after completing continuous service for not less than five years: (i) on superannuation, (ii) on retirement or resignation, or (iii) on death or disablement due to accident or disease.

I am sorry I have not been able to find the provisions where an employee is entitled to gratuity if asked to leave or dismissed for any reason after completing 3 years of service. I would appreciate it if you could enlighten me on the provisions existing in the Payment of Gratuity Act, 1972, or Rules.

Regards,
BS Kalsi
Member since Aug 2011

Please clarify under what provision of the Act any employee with 3 years or less service is paid gratuity and where it is being practiced as stated by you.

Thank you.

Regards

An employee is entitled to gratuity only after serving 5 years of meritorious service. In this case, if he is on the rolls of the company, he should have worked 240 days in a year to be eligible for gratuity for that year. Any service in a year less than 240 days will disqualify him from receiving gratuity. However, the company has the liberty to consider this period.

Thanks,

Regards

Dear Seniors, I need clarity on gratuity. One of my colleagues has resigned recently, with a date of joining on 09.10.2008 and a relieving date of 31.07.2013, which totals 4 years, 9 months, and 22 days. Therefore, I request clarification on whether he is eligible for gratuity or not. Anticipating your valuable response.

Regards, Ravi

What is the gratuity rule? How can it be calculated? Please explain.

Regards,
Ravindra Sharma

You are advised to see the trailing mail posted by Sh. Mritunjay Nath Sahu, where he has nicely explained that an employee borne on the muster rolls of the company should have worked 240 days in a year to enable him to earn gratuity for that year. Any service in a year less than 240 days will disqualify him from getting gratuity.

In view of the above, you need to calculate the number of days you have worked in each of the years, including the last year of your service.

Regards,
BS Kalsi
Member since Aug 2011

Gratuity Eligibility Criteria

Gratuity shall be payable to an employee upon the termination of their employment after they have rendered continuous service for not less than five years:
(a) on their superannuation,
(b) on their retirement or resignation, or
(c) on their death or disablement due to accident or disease.

It is important to note that the completion of five years of continuous service is not required if the termination of employment is a result of death or disablement. Therefore, the condition of five years of service does not apply in cases of death or disablement.

Even if an employee has worked for 240 days in the fifth year, they are still entitled to gratuity even if they have not completed the full five years of service.

Regards,
Rajendra Bhavsar
Manager (P&A)
Afcons Infrastructure Ltd., CMRL Project, Chennai
[Phone Number Removed For Privacy Reasons].

I want to know the provision of PF, ESI, and gratuity for employees over 58 years old. We are transferring him from the company's payroll to the contractual payroll.