Dear All,
I have also faced this situation and there is a fair amount of controversy over the interpretation. From the spirit and letter of the Gratuity Act, it is clearly stated that an employee is eligible to receive gratuity on completion of 5 years of continuous service. Service period will then be calculated as the period from the date of joining the employment to the date of retiring/resigning from the employment. So, first and foremost, there has to be a period of 5 years of service.
During this period of minimum 5 years service, if in any calendar year of 12 months, if the employee, for reasons given, has not completed 365 days work but has completed 240 days (or as applicable), then it will be considered that the employee has completed continuous service for that year. So, if an employee joins on 01/01/2000, he completes 5 years on 31/12/2004, and becomes eligible on 31/12/2004, and not before that. During during any of the years 2000, 2001, 2002, 2003, or 2004, if the employee did not work 365 days but worked 240 days, it will be considered as a full year. However, if the employee resigned on 31/08/2004, though he would have worked more than 240 days in 2004, it will not be considered as a full year in 2004, and so not 5 completed years. thus, he would not be eligible for gratuity.
If the Lawmakers intended that such a person should be eligible for gratuity after working for 4 years and 240 days, the law would have said so, and not mention the 5 years mandatory requirement.
As against that, if the employee worked for 240 days in between 01/01/2004 and 31/12/2004, and was on leave of various kinds for the remaining 125 days, he would have been eligible for gratuity on 31/12/2004, provided he was on the payroll on 31/12/2004.
This is my personal interpretation and opinion.
I have also faced this situation and there is a fair amount of controversy over the interpretation. From the spirit and letter of the Gratuity Act, it is clearly stated that an employee is eligible to receive gratuity on completion of 5 years of continuous service. Service period will then be calculated as the period from the date of joining the employment to the date of retiring/resigning from the employment. So, first and foremost, there has to be a period of 5 years of service.
During this period of minimum 5 years service, if in any calendar year of 12 months, if the employee, for reasons given, has not completed 365 days work but has completed 240 days (or as applicable), then it will be considered that the employee has completed continuous service for that year. So, if an employee joins on 01/01/2000, he completes 5 years on 31/12/2004, and becomes eligible on 31/12/2004, and not before that. During during any of the years 2000, 2001, 2002, 2003, or 2004, if the employee did not work 365 days but worked 240 days, it will be considered as a full year. However, if the employee resigned on 31/08/2004, though he would have worked more than 240 days in 2004, it will not be considered as a full year in 2004, and so not 5 completed years. thus, he would not be eligible for gratuity.
If the Lawmakers intended that such a person should be eligible for gratuity after working for 4 years and 240 days, the law would have said so, and not mention the 5 years mandatory requirement.
As against that, if the employee worked for 240 days in between 01/01/2004 and 31/12/2004, and was on leave of various kinds for the remaining 125 days, he would have been eligible for gratuity on 31/12/2004, provided he was on the payroll on 31/12/2004.
This is my personal interpretation and opinion.