Can Rehired Employees Count Previous Service for Gratuity? Seeking Advice on Policy

One of our employees resigned in December 2014 after completing 4 years of service. His full and final settlement was completed. After one month, in January 2015, he applied to rejoin duty through an application. Our organization has issued him a new Employee code and a fresh appointment letter.

Gratuity Calculation Query

My question is, if he later claims the previous period of service, will that be considered for his gratuity calculation?

Regards,
Sandeep

As per the Act, gratuity is applicable to an employee if the employee completes 4 years and 8 months of continuous service in the company. Since your employee left the job after 4 years of service, he is not eligible for gratuity. To claim gratuity, he needs to complete 4.8 years of service from the date of the fresh appointment order.

Even if he makes a claim legally, it is not valid.

Regards,
V.M. Lakshminarayanan

I do not agree with the interpretation given by V M Lakshminarayan regarding continuous service. According to the Payment of Gratuity Act, only upon completing 5 years of continuous service does a person become eligible for gratuity. The confusion Sandeep has is not about the eligibility but about the clubbing of old service with the current service. His concern is whether this employee might claim gratuity later, after one or two years, asserting that his date of joining should be the date of first joining and not his second tenure.

Since you have made the full settlement when he left the company and he has again requested employment and been given employment with a new employee ID, he should be considered a new employee. Therefore, there cannot be any demand for considering his old date of joining when he leaves the company.

Regards,
Madhu.T.K

I request you to refer to the recent amendment in the Gratuity Act related to eligibility criteria.

Regards,
V. M. Lakshminarayanan