Am I Eligible for Gratuity After 4 Years and 10 Months of Service?

I have been working with my current organization since 02/08/2010, and I resigned on 31/10/2014 with a two-month notice period. (My last working day with the company will be 31/12/2014). Am I eligible for gratuity?

You joined in August 2010. Only if you have completed 4 years and 6 months (240 days) in the fifth year will you be eligible for Gratuity. Since you will be relieved in December 2014, you would have completed 4 years and 4 months only, and hence, you will not be eligible for Gratuity. Try if you can extend your stay in the company for another 2 months to get Gratuity.

Thanks,
S. Narasimhan

I agree with the view of the member. If you have completed 4 years and 240 days in the fifth year, you are eligible for gratuity. Since you have not completed 240 days in the fifth year, you will not be eligible for gratuity.

In the 5th year, if you complete nearly about 8 months (240 days), then you are eligible to apply for gratuity. However, you should consult your HR department as some companies have their own policies. In some companies, gratuity is not paid unless you complete 10 years in the same company, even if you are eligible by law. Conversely, some companies pay if you have completed a total of 5 years, regardless of eligibility. Seek guidance from your HR department to understand how your company's policies align with the law. Here, we can only provide information based on the law.

Regards

Kindly suggest whether an employee who is terminated after serving for 4 years and 10 months will be eligible for gratuity. The termination was due to unprofessional practices in the company. I also wanted to know if he can be given an experience letter upon request.

Regards,
Sharad Kumar

As per the Gratuity Act, you are not eligible for gratuity. I agree with Mr. Raghvendra; you have to check with the HR department regarding the company policies. It also depends on your last performance, behavior, and attitude with management.

Regards,
D.N. Sharma

1. The majority of companies follow the law on gratuity for the payment of gratuity to their employees.

2. Companies that have established rules for the payment of gratuity to employees only if they have completed 10 years of service with them are in violation of the law on gratuity.

3. In the current case, it is quite clear that the company follows the Payment of Gratuity Act, according to which the employee is not eligible for the payment of gratuity. Hence, in all probability, this would be the reply of the HR department if they are approached.

Thanks,
G. Hari

Gratuity Forfeiture Conditions

1. As per the provisions of the Payment of Gratuity Act, gratuity can be forfeited in the following cases:

- An employee whose services have been terminated for any act, willful omission, or negligence causing any damage or loss to, or destruction of property belonging to the employer—gratuity to be forfeited to the extent of such damage or loss caused.

- An employee whose services have been terminated for riotous or disorderly conduct or any other act of violence on his part—gratuity to be forfeited wholly or partially.

- An employee whose services have been terminated for any act which constitutes an offense involving moral turpitude committed by him during the course of his employment—gratuity to be forfeited wholly or partially.

Gratuity Entitlement

2. The employee is entitled to full or partial gratuity based on the reasons for his termination, as per law.

Eligibility Criteria

3. For being eligible, the terminated employee should have completed 5 years of service (namely, in the fifth year of service, he should have worked for at least 240 days). In other words, in the last 10 months, he should have worked for at least 240 days.

Experience Letter

4. Regarding his request for an experience letter, the same can be given, but the real reasons for separation should also be specified therein.

Thanks.

Regards,
G. Hari

Understanding the Gratuity Act: Eligibility Criteria

The Gratuity Act clearly mentions that gratuity is payable to an employee who has completed 5 years of service, with an exemption in the case of an employee who expires before completing 5 years of service. As far as I understand from the spirit of the Act, an employee should complete a period of 5 years from the date of joining to the date of cessation of service. This period of 5 completed years has to be maintained compulsorily.

The point of 240 days is applicable only when the employee has taken 'leave without pay' or was not working for any period during any year during the course of service. For example, if an employee joined service on 1st January 2010 and resigns on 31st December 2014, he has completed 5 years of service provided he has worked for a minimum of 240 days during each of these 5 years from 2010 to 2014. If he resigns on any day before 31st December 2014, he has not completed 5 years of continuous service even if he has worked more than 240 days during each year. This, I believe, should be the correct interpretation.

If the lawmakers wanted to make gratuity payment to employees who complete 4 years and 240 days, they would not have mentioned '5 completed years of service'. This is my interpretation, although I believe the Madras High Court has given some other judgment which does not seem to follow the spirit of the Act. I am open to correction.