Gratuity Eligibility Question: Does an Employee Qualify After 5 Years of Service?

Respected Seniors, One of our employees joined on 20.08.2007 and resigned on 23.06.2012. Is he eligible for gratuity benefits? Please advise me.

Thanks & Regards,
Muthu
[Phone Number Removed For Privacy Reasons]

This employee is not eligible for gratuity benefits as he has not completed 5 years of service.

Regards,
Prachi

If he completes 4 years and 5 months, it will be treated as 5 years. He is eligible for gratuity.

Regards,
Uma

He is eligible for gratuity. He has completed 4 years and 8 months.

Regards,
Hema
[Phone Number Removed For Privacy Reasons]

Please read paragraph 4 for the continuity of service and refer to 2A (1) (2). As he has completed 4 years and 240 days, we need to consider him eligible for gratuity.

Regards,
Mohan Kumar

As per his length of service from the date of joining (DOJ), he is fully eligible for gratuity as his five years were already completed in 2012.

Thank you for the opportunity to assist with the corrections.

Dear Muthu,

What Mr. Mohan said is correct. Also, check whether this employee completed 240 days in each year of the last 4 years.

Regards,

K. Anjireddy

Who has completed 240 days in a year is eligible for gratuity.

Regards,
Sachin

To be eligible for gratuity, one must complete a minimum of 4 years and 240 days of service. I completely agree with Hema and Kumar.

In the present scenario, I do not agree with Mr. Kumar DQS. The employee has to complete 5 years for gratuity entitlement. There is no provision for waiver of shortfall in service. If there is any High Court or Supreme Court judgment on this matter, please update me.

Thanks.

In normal cases, gratuity is payable to an employee upon the termination of their employment after they have rendered continuous service for not less than five years. However, sometimes problems arise regarding whether an employee is required to be present on all working days in a year. This issue is addressed in Section 2A (Continuous service) of the Act, which clarifies that for the calculation of a one-year period, if an employee has worked for not less than two hundred and forty days in an establishment operating for not less than six days a week during the preceding twelve calendar months before the reference date, they are eligible for gratuity payment.

In your specific case, you mentioned that the concerned employee joined on 20.08.2007 and resigned on 23.06.2012, indicating completion of 4 years, 10 months, and 3 days of service. It is now necessary to determine if during the 10 months and 3 days period, the employee has completed 240 days of work. If this is confirmed, the employee will indeed be entitled to gratuity payment.

Regards,
BS Kalsi
Member since Aug 2011

The employee is very much eligible for payment of gratuity as he has completed more than 240 days in the 5th year of his service. As per Sec. 25B of the ID Act, a workman shall be said to be in continuous service for a period of one year if he is, for that period, in uninterrupted service, including service which may be interrupted on account of sickness, authorized leave, accident, or a strike which is not illegal, a lockout, or cessation of work which is not due to any fault on the part of the workman.

Continuous Service and Gratuity Eligibility

Section 2-A of the Payment of Gratuity Act defines "Continuous service of one year of service," which is similar to Sec. 25B of the ID Act mentioned above. Here is the judgment of Madras HC which held that if an employee has completed 240 days of continuous service during the 5th year of his service, he is eligible for payment of gratuity.

There is no need to seek any judgments because the Act is clear. After completion of 4 years, during the last year of employment, if more than 240 days of continuous employment are completed, it is 'deemed' that five years are completed, and liability to pay gratuity arises.

Regards,
Sameer Paranjape, Labour Law Consultant, Pune [Phone Number Removed For Privacy Reasons]

As per the provisions of the Gratuity Act 1972, para 2A, if an employee completes 4 years and 240 days of service, they will be eligible for gratuity payment. The employee has completed more than 4 years and 240 days, making them eligible for gratuity.

Kindly let me know if you need any further clarification.

Thank you.

Dear Muthu,

Please read paragraph 4 for continuity of service and refer to 2A (1) (2). Since he has completed 4 years and 240 days, we need to consider him eligible for gratuity.

Regards,
Murari