Is This Employee Eligible for Gratuity with Over 5 Years but Only 1034 Days Worked?

In our company, an employee has worked since 13/03/2008 and resigned on 30/06/2014. His service period is more than 5 years, but his total working days are 1034. I believe that an employee should be present for at least 240 days in a year. So, is this employee eligible for gratuity or not?

Thank you.

Dear CGM, Please elaborate on your query. Has the employee only worked for 1,034 days in total over 6 years? It seems that he is not coming to the office regularly. Did he come on a part-time basis? If you elaborate on the query, we can provide a proper response.

Thanks and regards,

Lakshminaryana [Phone Number Removed For Privacy Reasons]

Sir,

I would like to explain that this question pertains to a female worker who was employed as a Helper (sweeper). She was our permanent employee. However, due to her illness (waist pain), she was only able to work between 15 to 20 days in a month, which prevented her from completing the required 240 working days each year during her 6 years of service.

As we have other employees who can perform the same duties, out of a sense of humanity, our management decided to overlook her absences and allowed her to continue working in the same capacity.

If her employment wasn't terminated, nor was her absence counted, then she is eligible irrespective of the number of days.

Recommendation for Ex-Gratia Payment

My recommendation would be to pay her an ex-gratia payment instead of the gratuity and have her sign a 'no-dues' pending letter. This letter should explain that she understands there is no gratuity payable and that she is accepting the ex-gratia payment. It should also state that she will never make any claims or if she does, she forfeits the ex-gratia payment with interest.

Understanding Ex-Gratia Payments

If her employment wasn't terminated nor was her absence counted, then she is eligible irrespective of the number of days. My recommendation would be to pay her an ex-gratia payment instead of the gratuity and have her sign a 'no-dues' pending letter which explains she understands there is no gratuity payable and is accepting ex-gratia payment and that she will never make any claims or, in the event of a claim, she forfeits the ex-gratia payment with interest.

Hi, what is an ex-gratia? Is it a lump-sum amount or calculated properly?

Ex-Gratia Calculation Method

Regarding ex-gratia, you can consider the following method since the lady has not completed 240 days in the year:

If the gratuity amount in the regular case is, for example, 5000/240 X days she has worked = the amount of ex-gratia.

For example, if a lady has a 10,000/- salary, the gratuity would be 5769/240 X 220 = 5288, which is the amount of ex-gratia for that particular year.

Regards,
SDP

Dear CGM, you have mentioned that the concerned employee worked from 13/03/2008 to 30/06/2014. By simple calculations, it appears that the concerned employee worked for 6 years, three months, and 17 days. However, you have mentioned in your subsequent posting that due to her illness (Waist Pain), she has hardly worked for 15 to 20 days in a month, so she couldn't complete 240 working days in each year of her 6-year service.

Gratuity Eligibility

You know that gratuity is payable to an employee upon the termination of his/her employment after rendering continuous service for not less than five years. The Act has clarified under its Section 2A that for the calculation of a one-year period, if an employee, during the twelve calendar months preceding the date for which the calculation is being made, has actually worked under an employer for not less than 240 days in an establishment that operates for not less than six days a week, the employee is eligible for gratuity payment.

You can calculate the number of days for each of the years in which the female has worked to see if she has completed 240 days in a year, although the sick leave sanctioned by the management shall be added in the calculation.

Regards,
BS Kalsi