Gratuity Denied After 4 Years 11 Months in Mumbai: How Can I Challenge This with HR?

Hi, I have completed 4 years and 11 months in my current organization. When I inquired about the gratuity with my HR, they denied it, stating that according to company policy, one must complete 5 years. The law for 4 years and 240 days applies only to the Madras state. Is there any way I can receive my gratuity? What should I say, or can someone provide me with the proper document so that I can discuss this with my HR? Please help me, guys.

If you have worked for 240 days in the fifth year, then it must be considered as one year of service as per the Madras High Court judgment. You are eligible for gratuity. Check with your labor officer.

As per the Gratuity Act 1972, Section 4 (1), it clearly states that gratuity is payable to a person on:
(a) resignation,
(b) termination on account of death or disablement due to accident or disease,
(c) retirement,
(d) death.

Normally, gratuity is payable only after an employee completes five years of continuous service. In cases of death and disablement, the condition of a minimum of 5 years of service is not applicable. So, in your case, gratuity is not applicable.

Madras High Court Decision on Gratuity

The Madras High Court decision was given in the case of Mettur Beardsell.

With regards,
S. Srinivasan

As advised by other forum members, please complete the formality and let the competent authority make the final decision. Regarding the Madras High Court judgment, it was specific to a particular case in Madras. While other courts can refer to it, following the same judgment throughout India is not mandatory. A judgment from the Supreme Court is applicable to all courts across India.

So please proceed with the application.

Eligibility for Gratuity

According to the rule, you will be eligible to receive gratuity when you complete 240 days of service in your 5th year. Please check, and then you will have to apply for gratuity. We believe that you definitely have completed 240 days of service in your 5th year because you are currently in the 11th month.

Please follow the suggestions. However, I think you should email your HR (avoid verbal communication) and wait for her reply. This email communication will help you present your case more strongly (use it as proof).

Regards,

If your HR department is saying that you are not eligible for gratuity, then there might be some reason behind this. Please share the reason for the non-payment of gratuity so that all knowledgeable persons here at Cite HR can reply. Without knowing the HR view, I don't know how people are suggesting to you.

Thanks & Regards

Before passing comments on how people suggest, it would be wise if you read the query in detail. The member has sought their view from the forum regarding their HR stating that they are not eligible for gratuity due to not completing 5 years, even though they have completed their tenure with the company for a period of 4 years and 11 months.

Thanks & Regards

Just for your knowledge, gratuity is payable only if he has completed 240 days in his 5th year.

Point No. 1

What if he was on leave during his 5th year for many days and did not complete 240 days?

Point No. 2

What if he was on a training basis or on a contract for 1 or 2 years after joining the organization?

Point No. 3

What if he was on long leave during his working tenure and did not meet the gratuity requirements?

I hope you are clear now, Mr. Saji from Nidra Hotel. That's why I said let us know his HR point of view in that case because he is the one who knows the reason behind his statement. I don't think his HR would be as you have imagined.

Thank you.
Regards.

Please read the very first post of this thread, i.e., the query of the person who posted this thread. In the first post itself, the querist mentioned that he was denied gratuity by HR, stating that the policy of the management is to give gratuity only to those who complete 5 years, not less than that. It is also stated in the same post that they said the Madras High Court judgment is applicable only for the state of Tamil Nadu.

Understanding the Gratuity Act

Read the Gratuity Act, specifically the definition of the term "continuous service" in Section 2: Definitions, which is as follows:

Section 2: Definitions

(b) "completed year of service" means continuous service for one year;

[2] [(c) "continuous service" means continuous service as defined in section 2A;]

Section 2A: Continuous Service

For the purposes of this Act:

1. An employee shall be said to be in continuous service for a period if he has, for that period, been in uninterrupted service, including service which may be interrupted on account of sickness, accident, leave, absence from duty without leave (not being absence in respect of which an order treating the absence as a break in service has been passed in accordance with the standing orders, rules, or regulations governing the employees of the establishment), lay-off, strike, or a lock-out or cessation of work not due to any fault of the employee, whether such uninterrupted or interrupted service was rendered before or after the commencement of this Act.

2. Where an employee (not being an employee employed in a seasonal establishment) is not in continuous service within the meaning of clause (1), for any period of one year or six months, he shall be deemed to be in continuous service under the employer:

(a) For the said period of one year, if the employee during the period of twelve calendar months preceding the date with reference to which calculation is to be made, has actually worked under the employer for not less than:

(i) One hundred and ninety days, in the case of any employee employed below the ground in a mine or in an establishment which works for less than six days in a week; and

(ii) Two hundred and forty days, in any other case;

(b) For the said period of six months, if the employee during the period of six calendar months preceding the date with reference to which the calculation is to be made, has actually worked under the employer for not less than:

(i) Ninety-five days, in the case of an employee employed below the ground in a mine or in an establishment which works for less than six days in a week; and

(ii) One hundred and twenty days, in any other case.

3. Where an employee, employed in a seasonal establishment, is not in continuous service within the meaning of clause (1), for any period of one year or six months, he shall be deemed to be in continuous service under the employer for such period if he has actually worked for not less than seventy-five percent of the number of days on which the establishment was in operation during such period.

As per this definition, 240 days of service should be considered as one year of continuous service.

There are many judgments to this effect. The most cited judgment is:

Mettur Beardsell Ltd Madras Vs Regional Labour Commissioner (Central), Madras, 1998 LLR 1072 (Madras High Court).

You will become eligible for gratuity after 4 years and 240 days, as it will be 5 complete years of service. Serving any company for 240 days is considered as 1 completed year of service. So, 4 years and 240 days = 5 years of service = Eligible for gratuity.

Hope this simple explanation clears all your doubts.

Now, whoever says that the Madras High Court judgment is not applicable outside must know that in the absence of any judgment of the Hon'ble Supreme Court overruling it, the Madras High Court judgment has persuasive value and is admissible in any part of the country. We cite this judgment frequently.

So, dear Anonymous, I would advise you to contact the local Labour Commissioner, who is also the Authority under the Payment of Gratuity Act, and have my word that you will get your gratuity very soon.

Regards.

Eligibility for Gratuity

You will become eligible for gratuity after 4 years and 240 days, as it will be considered 5 complete years of service. Serving any company for 240 days is considered as 1 completed year of service. Therefore, 4 years and 240 days equal 5 years of service, making you eligible for gratuity.

Dear Kamal Kant Ji, this is what I wanted to explain but in simple words... thanks for your knowledgeable information.

Dear Vivek Ji & Cite HR Members, I really apologize if my behavior was not good; I was only taking the side of that HR person because maybe he was wrong. But if he is correct, then no one is thinking from that side of the case. Anyways, I assure you I will not repeat the same nor comment now on any post.

Thanks & Best Regards,
Jeetu Singh