Employment Termination After 6 Years: Am I Entitled to Gratuity and Leave Encashment?

A person serving the 6th year in the same company, if terminated for any reason, would be entitled to receive all compensation and benefits such as gratuity and leave encashment. Please let me know.

Regards,
Meharwade

Once a person completes 5 years of continuous service, he/she is eligible for Gratuity, irrespective of termination or resignation. Leave encashment is also applicable to all individuals if any leave days are remaining.

I hope this helps clarify the eligibility criteria for Gratuity and leave encashment.

Forfeiture of Gratuity: Conditions and Exceptions

Yes, an employer can forfeit gratuity even if an employee has completed 5 years in the following cases:

- If the services of such an employee have been terminated for riotous or disorderly conduct or any other act of violence on their part.
- If the service of such an employee has been terminated for any act which constitutes an offense involving moral turpitude, provided that such offense is committed by them in the course of their employment.

Please note that the above act should have been committed by the employee during their employment. There should be a proper inquiry held after which the employee was found guilty of the aforesaid act or misconduct. Once proved guilty, the employer should issue a termination note to the employee describing their misconduct.

As per Section 4(1) of The Payment of Gratuity Act, 1972, gratuity is 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 an 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.

The gratuity payable to an employee may be wholly or partially forfeited if: (i) the services of an employee are terminated for their riotous or disorderly conduct or any other act of violence, or (ii) for any act which constitutes an offense involving moral turpitude, provided that such offense is committed by them in the course of their employment.

There is no separate Act or rule governing the encashment of ELs or PLs; it purely depends on the organization. However, some labor laws provide for the encashment of ELs or PLs. You need to check which Act is applicable to your company and decide accordingly.

Regards,
BS Kalsi
Member since Aug 2011