Am I Eligible for Gratuity After 6 Years with My Company? Seeking Clarification

Hi Sir, I have been working in a private firm for the last 6 years. However, the company only started providing gratuity 4 years ago. Therefore, I need clarification on whether I am eligible to claim gratuity. Thank you.

Gratuity Eligibility Under the Gratuity Act 1972

As per the Gratuity Act 1972, eligibility for gratuity is 4 years plus 190 days for employees who work in mines or for companies that operate 5 days a week. Additionally, it is 4 years plus 240 days for employees working in companies with a 6-day work week.

You mentioned that you have been working in the company for the last 6 years. In that case, you are already eligible for gratuity. There's no doubt about that.

But only 4 years ago, my company started offering gratuity. Is there any legal criterion regarding whether a company should have a gratuity policy for 5 years?

Understanding Gratuity Entitlement

The Gratuity Act is designed to protect employees' rights to gratuity during their tenure in a company. As I have already mentioned, you are eligible for gratuity as per the Gratuity Act of 1974. The company cannot deny you gratuity, and in your case, your gratuity entitlement is for six years.

To update my knowledge, can you please specify which section of the POG Act 1972 mentions '190 days for companies working 5 days a week and 240 days for companies working 6 days a week' to constitute one year of service?

Regards,
Varghese Mathew

Payment of Gratuity Act: 1972

Sections: 1(3)(b)(c)(3A), 2(a)(s), 2A(1), 2(a)(i)(ii)(b)(i)(ii), 4(2)(5), 7, 7A, 8, 9

Formula for Calculation

The formula for calculating gratuity is: \[(Basic + DA) / 26 * 15 * No. of years in service\]. Please note that the Basic + DA is based on the last drawn salary.

Eligibility for Gratuity After 5 Years of Service

When an employee completes five years of service, they become eligible for gratuity. The Payment of Gratuity Act, 1972, outlines the following relevant sections: Sec: 1(3) (b)(c)(3A), 2(a)(s), 2A (1), 2 (a)(i) (ii) (b) (i) (ii), 4(2)(5), 7, 7A, 8, 9.

Formula for Gratuity Calculation

The formula for calculating gratuity is: [(Basic + DA) / 26 * 15 * No. of years in service]. Here, Basic + DA refers to the last drawn salary.

If the Gratuity falls under CTC as mutually agreed upon, can it be under the scope of the Gratuity Act 1972?

I have approached the company for a gratuity claim. Unfortunately, my HR is telling me that the company started gratuity in 2011 and as only 4 years have passed, they cannot provide it. However, I have completed over 6 years of service with the company. Can you please confirm if there is any legal requirement for a company to offer gratuity for at least 5 years? Also, what steps can I take to claim what is rightfully mine if I am eligible?

I have approached the company to claim my gratuity. Unfortunately, my HR has informed me that they are not prepared to pay the gratuity as the company only initiated the gratuity scheme four years ago in 2011. However, I have been working in this company for the past six years. Could you please advise me on how I can convince the company or suggest what actions I can take to secure my claim if I am indeed eligible? Your assistance is greatly appreciated.

Dear George, I apologize for the delayed response. I would like to draw your attention to Section 7 (1) of the Gratuity Act, which is quoted as follows:

"An employee who is eligible for payment of gratuity under the Act, or any person authorized, in writing, to act on his behalf, shall apply, ordinarily within thirty days from the date the gratuity became payable, in Form 'I' to the employer."

I would recommend you to please raise the relevant form. If you want, I will forward you a soft copy of Form I. Send a test mail to: [Email Removed For Privacy Reasons].

After submission of the subject form, action as per Section 8 has to be initiated by the employer and the employee, which is quoted as follows:

Notice for Payment of Gratuity

(1) Within fifteen days of the receipt of an application under rule 7 for payment of gratuity, the employer shall:

(i) If the claim is found admissible on verification, issue a notice in Form 'L' to the applicant employee, nominee, or legal heir, as the case may be, specifying the amount of gratuity payable and fixing a date, not being later than the thirtieth day after the date of receipt of the application, for payment thereof, or

(ii) If the claim for gratuity is not found admissible, issue a notice in Form 'M' to the applicant employee, nominee, or legal heir, as the case may be, specifying the reasons why the claim for gratuity is not considered admissible. In either case, a copy of the notice shall be endorsed to the controlling authority.

(2) In case payment of gratuity is due to be made in the employer's office, the date fixed for the purpose in the notice in Form 'L' under clause (1) of sub-rule (1) shall be refixed by the employer, if a written application in this behalf is made by the payee explaining why it is not possible for him to be present in person on the date specified.

(3) If the claimant for gratuity is a nominee or a legal heir, the employer may ask for such witness or evidence as may be deemed relevant for establishing his identity or maintainability of his claim, as the case may be. In that case, the time limit specified for issuance of notices under sub-rule (1) shall be operative with effect from the date such witness or evidence, as the case may be, called for by the employer is furnished to the employer.

(4) A notice in Form 'L' or Form 'M' shall be served on the applicant either by personal service after taking receipt or by registered post with acknowledgment due.

(5) A notice under sub-section (2) of section 7 shall be in Form 'L'.

Hope that answers your questions.

Regards,