Am I Really Ineligible for Gratuity After 4 Years and 265 Days? Seeking Clarity on HR's Calculation

I have a query regarding my gratuity. I was working with a multinational company in Pune. I have completed 4 years, 8 months, and 25 days in my tenure in the organization (Total = 1729 days). According to labor law, one should have completed 4 years and 240 days to be eligible for gratuity. I have completed 4 years and 265 days, which meets the requirement for gratuity. However, my HR executive informed me that I am not eligible for gratuity as I haven't completed 4 years and 8 months according to their calculation.

Date of Joining

Date of Joining = 12 Dec 2008

Date of Leaving

Date of Leaving = 5th Sept 2013

The way they are calculating gratuity is by dividing the number of days by 365 days (a year), for example:

= 1729 / 365

= 4.7369

= 4.74 months

According to their calculation, I have completed 4.74 months. They insist that it should be 4.8 months to be eligible for gratuity, despite the fact that I have completed 4 years, 8 months, and 25 days.

My Questions Are

1) Are they calculating gratuity in the right way according to government labor law?

2) Am I eligible to receive my gratuity from the organization?

As per your calculation, it is 1729 days. Accordingly, it equates to 4.74 years and not 4.74 months. If you consider 4.74 years, it is equivalent to 4 years and 8.8 months or 4 years and 292 days, which will address your HR Executive's query or calculation.

Gratuity Eligibility

To the best of my knowledge, for gratuity eligibility, completion of 5 years is required. While the Madras HC judgment states the gratuity eligibility as 4 years and 240 days, I am unsure if the same judgment applies in Pune. Let's wait for other seniors to advise on this.

This is not the method of calculating gratuity. Section 4 and 2A of the Act have to be read together in the matter. Section 2-A(2) states that an employee shall be deemed to be in continuous service during the period of one year preceding the date with reference to which calculation is to be done if he has worked for not less than 240 days in that period. So in your case, the calculation has to be done with reference to the number of years completed as of 5th September 2013.

Working backwards, there is no dispute on the 12-month period from 5th September 2013 to 6th September 2012, 5th September 2012 to 6th September 2011, 5th September 2011 to 6th September 2010, and 5th September 2010 to 6th September 2009 as constituting continuous service. Now, as regards 5th September 2009 to 6th September 2008, you are short by only 99 days. So that means, as per Section 2-A(2)(a)(ii), since you have worked for approximately 266 days, you are to be counted to be in continuous service in that year and accordingly, you become eligible for gratuity for the fifth year too as per Section 4 of the PG Act 1972.

However, I marvel at the ingenuity of the argument of your HR personnel.

Regards,
KK