Is My Friend Eligible for Gratuity After 4 Years and 10 Months of Service? Seeking Advice

One of my friends recently resigned from his position as VP-Projects at a reputed construction company in Chennai. He served the company with distinction for 4 years and 10 months. However, when he was relieved, he discovered that the company is not paying him the gratuity, claiming that he has not completed 5 years of service. I would like to know if he is eligible to receive the gratuity and, if so, what options are available to him. I would also like to mention that the company has a Gratuity Trust managed by LIC.

I am eagerly awaiting your prompt response.

Regards,
Deepak P
Chennai.

The 4 years and 240 days clause is applicable for those who are retired or deceased, not for resignation cases. For resignation cases, 5 years of service are compulsory. Hence, the person is not eligible to claim gratuity. The condoning or waiving of the period of 2 months will not be applicable for resigned cases.

Thank you.

Yes, you are entitled to gratuity even with less than 5 years of service. Please find attached the judgment of the Hon. Madras High Court for your reference.

Thanks,

Sujeet

Your friend is entitled to gratuity because of a deeming clause of completion of service of 5 years. I advise you to serve a notice to the employer in Form "I" demanding the amount of gratuity for 5 years of service in the following manner:

Rate = Salary/26
Amount of Gratuity = 15 X 5 X Rate

In case no reply is received or your claim is rejected, approach the Controlling Authority under the PG Act. In your state, the Assistant Commissioner of Labour is the proper authority. File your claim in Form "N" together with documents such as the appointment letter, salary slip, notice, etc. I am sure you will have your claim.

Additionally, you can also file a complaint with the Inspector under the PG Act, who happens to be the Government Labour Officer.

Regards

As other members suggest, your friend is entitled to Gratuity, even if he doesn't reach 5 years of tenure. It will be applicable only in the Chennai region.

Regards.

No, the employee is not eligible.

Eligibility Criteria for Gratuity

1) Five years of continuous service.
2) If the employee dies within a minimum period (which may not be completed in 5 years), they are eligible.

Dear Deepak,

The 4 years and 240 days clause is applicable to those who have retired or passed away, not for cases of resignation. For resignation cases, 5 years of service is compulsory. Therefore, the individual is not eligible to claim gratuity. The condoning or waiving of the 2-month period will not be applicable for resigned cases.

Supporting Document Request

Boss, as you mentioned the 240 days clause applies only to those retired after completing 4.10 years, please provide the supporting document to all of us.

Yes, you are entitled to gratuity even with less than 5 years of service. Please find attached the judgment of the Hon. Madras High Court for your reference.

Yes, he is eligible for completion of 4.10 years of service. Contact the local Inspector of Factories and Assistant Labour Commissioner with the relevant relieved documents that show the continued rendering of service.

Regards,
Sujeet

Supporting Document Request for 240-Day Clause

As you have mentioned the 240-day clause applicable only to those who retire upon completion of 4.10 years, please provide the supporting document to all of us. Please check the attachment available in this thread, which was attached by Sujeeti. In that, the High Court of Chennai has instructed payment for individuals who have completed 4 years, 10 months, and 18 days. Normally, the waiving off of a short period is done for those who have died or retired, not for those who have resigned. This waiving-off procedure will be outlined in the company's HR policy and not based on any act or rules.

I have seen most of the replies. I expected an analysis of the term "Continuous Service" in PGA and the deeming proviso to that definition. It appears that Gratuity is payable only when 5 years of service are completed. However, if you consider the definition of "continuous service," it allows you to claim gratuity upon completion of 4 years and 240 days in the fifth year. This means that 4 years and 8 months of service are sufficient to claim Gratuity. This interpretation is irrespective of the judgment of the Chennai High Court.

In the case at hand, there is a service of 4 years and 10 months. Hence, there should not be any difficulty in claiming Gratuity. 5 years of service, in actual terms, amounts to 4 years and 240 days only.

This interpretation is applicable nationwide and not restricted to the state of Tamil Nadu alone.

Regards,
Adv. K. H. Kulkarni.

As you all know, this subject is one of the few matters discussed in this forum repeatedly. Again and again, the same points are raised by different schools of thought: one in favor and the other against. In my view, the stance taken by those who don't advocate for 4 years and 240 days is a pessimistic one, rather than based on irrefutable sound legal provisions. I am saying this based on the Supreme Court's judgment regarding what constitutes "continuous service," i.e., 240 days. According to this judgment, it would be sufficient if an employee completes 240 days of "continuous service" each year. Therefore, there should not be a different treatment for the 5th year, as it is the terminal year. Completing 4 years and 240 days in the 5th year should automatically qualify for the minimum gratuity under the Gratuity Act. I have not come across any judgments where gratuity is legally denied for those who have not completed the full 5 years of service. I fully support the views of Adv. K.H. Kulkarni and sympathize with those who do not understand this concept.

He is eligible if he presents 240 days in the fifth year, which means 4 years and 240 days. In that case, he is eligible for gratuity.

Please read the judgment shared by Mr. Sujeet of the Madras High Court, which is binding on the state of Tamil Nadu. Honorable Justice Abdul Wahab clearly stated that a person who had been in the service of an organization for 240 days or more in the fifth year is eligible for gratuity. If you read the judgment closely, you will find that the person who claimed gratuity in the case was neither terminated nor died but resigned. Hence, there is no question of a short period waiver. Moreover, there is no such thing. Mr. Deepak's friend's case is exactly the same as the attached judgment. Even here in Delhi, you can claim gratuity by applying the same principle given under the Madras High Court judgment on the subject. Referring to Chennai, it has a binding effect, and Mr. Deepak's friend is entirely entitled to gratuity even if he resigned. If a company is managing its trust, it cannot make its own rules to govern the trust. It can give more but not less than what is prescribed under the Act.

I would request you to give it another consideration in the light of the attached judgment. In my opinion, he is entitled to gratuity.

I think Deepak is eligible for the gratuity. As per my knowledge, Mr. Deepak must claim it as told by the boss.

I am 100 percent sure that the person is eligible for gratuity. A few days back, an employee from my company resigned under the same circumstances, and I personally handed over the cheque from the LIC trust.

In addition to the above members, I also agree that the concerned person is eligible for payment of gratuity in all respects.

Thanks & Regards,

Sumit Kumar Saxena

I want to know about the gratuity eligibility. Please suggest the exact days. In a few instances, it is mentioned as 4 years and 240 days eligibility for gratuity, while in some cases, it is stated as completing 5 years. Please suggest.

Dear Vasu,

Gratuity Eligibility: Understanding the Criteria

The minimum eligibility for gratuity is 4 years and 240 days in the 5th year. This totals to 5 years of continuous service, making a person eligible for gratuity.

Hope your query is answered. Feel free to revert in case of any doubt.

Regards

Eligibility for Gratuity

Not eligible as not completed five years of continuous service.

I am searching for the judgment in The Payment of Gratuity Act.

Employee working in multiple establishments

The employee has worked in 3-4 different establishments where all the owners are different, but the place of work and the job of the employee are the same. All the establishments are working as contractors for the principal employer. All the establishments are closed at intervals of 3 to 4 years.

Let's say:
1. A Firm started in Jan 2012 & closed in Dec 2015
2. B Firm started in Jan 2016 & closed in Dec 2018
3. C Firm started in Feb 2019 & closed in Mar 2022
4. D Firm started in Apr 2022 & remains in operation to date.

In such a case, my opinion is that the employee is eligible for gratuity.

Require senior views.

Regards, Arihant