Gratuity Confusion: Can Long-term Employees Claim It if the Company Shuts Down?

I would like to know if an employee has been continuously working for 4 years in the same company, will the company be shut down for any reason? Now, can that employee receive a gratuity amount or not? Please suggest.

Thanks,
Sam.S

If he has no continuous service in the 5th year, he will not get gratuity.

Regards,
Varghese Mathew
[Phone Number Removed For Privacy Reasons]

Gratuity Payment and Retrenchment Benefits

Gratuity is payable only after the completion of 5 years of service. However, in the case of a shutdown, other benefits are applicable.

Please specify the state in which you are presently working for information on retrenchment benefits.

Regards

I note that I would like to thank all of you for providing me with better replies. Can an employer deduct some percentage of the gratuity amount from the employee's CTC? I would like to know about this because I think this amount may be deducted from the total CTC. Please provide clarification about it. Thank you.

Regards.

As per the Gratuity Act, the concerned employee will not be entitled to receive gratuity since he has worked less than 5 years.

Regards,
Sibabrata Majumdar

Gratuity Eligibility Requirements

Until or unless one completes 5 years with the company, they cannot claim gratuity. This is the minimum requirement for gratuity. There is a possibility that if you have completed 4 years and 6 months or more, you may be able to apply for gratuity.

If I'm correct, Sam S.'s situation is a little different compared to others who are quitting without completing 5 years of continuous service. Here, the company is shutting down, and it should be treated on par with final settlement in cases other than resignation (e.g., death). A separation package should typically include appropriate compensation, including gratuity, regardless of qualification under the Gratuity Act. It is sometimes a negotiated settlement, a compensation package where all types of benefits are considered. If there are still company personnel present, Sam should file his claim with the designated authorities under the Gratuity Act/ALC so that he can receive whatever is legally available.

Thank you.

In the case of a shutdown of a company, an employee with 4 years of service will not receive gratuity, and he has no right to claim it before any authority.

Regards,
Varghese Mathew

Eligibility for Gratuity

No employee is eligible for gratuity if they have not completed five years of service.