Am I Eligible for Gratuity After 4 Years and 9 Months? Seeking Advice on Next Steps

I have been working in an IT company since May 12, 2010, and I resigned on January 24, 2015. My last day with the company will be March 24, 2015. As of today, I have completed 4 years and 9 months. We have a 5-day workweek. Am I eligible for gratuity? I have read various blogs, and some indicate that I am eligible. If I am indeed eligible, could you please assist me in obtaining the relevant legal documents confirming my eligibility? How should I proceed to provide this information to the HR team? Your help is greatly appreciated!

Regards

Yes, you are 100 percent eligible. No doubt about that. I also had completed 4 years and 8 months in my last company, but the company was initially denying me gratuity. Later, they gave me the gratuity when I produced some legal documents to them.

If I were your past employer, I would not have paid you the gratuity unless you were subjected to the judicature of the Madras HC. This subject has been discussed earlier many times in this forum.

Eligibility for Gratuity Calculation

Five years of service is a must. Please use this link for calculations: Gratuity Calculator: Online Gratuity Calculator to find the Gratuity

In some sections of the Act, I have read that 240 days is considered acceptable. The definition of continuous service mentions this aspect.

The gratuity is calculated after completing 4 years and 6 months, and your working period exceeds this duration. Therefore, you are eligible for it.

Thank you.

Regards

Gratuity Eligibility Based on Judicial Pronouncements

Based on some of the judicial pronouncements, if any employee has completed 4 years and 240 days of physical working days in the 5th year, they are eligible for gratuity.

You are eligible for gratuity. As per law, it is 4 years and 240 working days. When we say working days, it means 240 days for which you have received a salary irrespective of 5 or 6 days working in the week. Many employers and even human resource personnel deny giving out because of non-awareness of this fact of 4 years 240 days. Even in this posting, you will find people posting you as non-eligible. Don't worry if your employer says no; then please write to me at [Email Removed For Privacy Reasons] to get the ruling copy, which supersedes all.

Regards,
Harpreet Walia.

Gratuity and CTC Calculation

Nowadays, some companies are including gratuity in the CTC calculation. In such cases, if you are appointed and the company has factored in your gratuity in your CTC, you can request it. Otherwise, after completing 5 years of service, it will be applicable to you.

Thanks and regards

Dear Harpreet ji, Please share the ruling with the entire forum. My humble request to members is to check the legality with an expert before writing anything in this regard. In this forum, there are a number of threads on this subject in which I have expressed my views with support.

Gratuity Eligibility

I represent several corporates and have been advising them that gratuity is not payable if an employee has not completed 5 years of service (except in TN). I also inform the participants/students of my seminars & lectures.

Members are requested to correct me if I am wrong with convincing support.

You are very much right. Sometimes, members start sharing their experiences which are not correct. If some employer has paid the gratuity before the completion of 5 years, it does not mean that the act has been amended. It is appropriate to share the relevant rulings in this forum, based on which they are advising the payment before the completion of 5 years.

Regards,
P K Sharma

In general, if you have considered working days (other than Sat-Sun), then let's standardize 22 working days in a month. So, 240 days divided by 22 working days is 10.9 months, totaling almost 4 years and 11 months. Is this the correct calculation?

Eligibility for Gratuity as per the Gratuity Act

If any employee can complete 4 years, 8 months, and 11 days of service, are they eligible for gratuity as per the Gratuity Act? The employee must be able to complete the above-mentioned period.

Thanks,

Sankar Potala

Eligibility and Calculation of Gratuity

Kindly let me educate you regarding the eligibility and calculation of Gratuity in the situation below. According to the Act, I assume that 5 years of continuous service should be considered for eligibility and 240 days for one completed year based on a 6-day week.

This is a general query: If "X" joined on 01.01.2009 and worked the following days for each calendar year:
- 1st Calendar year: 305 days
- 2nd Calendar year: 300 days
- 3rd Calendar year: 170 days
- 4th Calendar year: 320 days
- 5th Calendar year: 242 days

It is presumed that Mr. "X" has been in continuous service without any breaks. However, he resigned immediately after completing 5 years of service on 02.01.2014.

Under these circumstances, is "X" entitled and eligible for the payment of Gratuity? If yes, to what extent?

Thank you in advance for your guidance.

With regards,
Gwarwade
IR positioned at MNC

Yes, you are eligible for gratuity. Please refer to the Madras High Court Decision 1998 LLR1072 (W.P. No. 2135 of 1987).

Hon'ble Madras High Court verdict in respect of entitlement of gratuity before completion of five years is not applicable to the rest of the states. It is applicable only within the jurisdiction of Madras HC. So what Mr. Korgaonkar has said on this forum is cent per cent correct. This has been validated by leading experts in HR/IR/Legal.

With this fact, the discussion on this matter should come to a logical closure for the HR fraternity.

Regards,
Anil Sharma

My wife has been employed with CTS since August 2, 2010. She has been on maternity leave since March 12, 2014, receiving payment until August 2014. She is expected to return to work on May 20, 2015. I would like to inquire about her eligibility for gratuity. Could you please advise on how long she needs to serve to qualify for gratuity based on her basic salary of 15,000? Additionally, I would appreciate it if you could provide information on the expected gratuity amount.

Looking forward to hearing from you with further details.

Thank you,
Guru

Hi, if a company doesn't provide any gratuity even though we complete more than 5 years, what should we do? If the company doesn't have a gratuity policy, then what happens?

Unfortunately, you are not eligible for Gratuity. The primary eligibility requirement to receive Gratuity is to complete 5 years of service; even if you have worked for 4 years, 11 months, and 15 days, you would not qualify. The calculation of 240 days is only considered after completing a full 5 years. For example, if you have worked for 5 years and 7 months, it would be considered as 6 years.

Regards,
Saravanan

Thank you for the clarification. I still need a few more details:

Maternity Leave

The company has provided 3 months of paid leave followed by 9 months of Loss of Pay. In this scenario, is the employee eligible for Gratuity by August 1, 2015?

Calculation Explanation

1500/26 x 15 x 5 = 43269.23. Could you please explain how this calculation was done?

Thank you for your time and understanding.

Regards,
Guru

The 84 days of maternity leave will be considered, but the 9-month Loss of Pay (LOP) will not normally be considered.

Gratuity Calculation as per the Act

The gratuity calculation as per the act is as follows:

- For daily wage workers: Per day wages x 15 days x Number of years worked.
- For monthly salary workers: Monthly salary / 26 days.

I hope this helps clarify the calculation process for you. Let me know if you need any further assistance.

We respect your suggestion, but please note that any court judgment in a particular case is applicable to that case only. The Gratuity Act still states that eligibility to receive gratuity is after five years; where has the 240 days requirement come from? We seem to be mixing in other sections to analyze the situation in our favor. If the Madras High Court has issued a judgment in one case, it cannot be considered a law.

I too agree that eligibility to receive gratuity is 5 years of service, and based on one judgment, it cannot become a law. Even in Tamil Nadu, it is 5 years of service to get gratuity. In one case, the Madras High Court has given a judgment on various interpretations, but there is no amendment in the Gratuity Act where it is clearly mentioned that 5 years of service is required to become eligible for gratuity.

Regards,
JS Malik

If you have completed 5 years of service, you are eligible for gratuity, except in the case of death.

Gratuity Eligibility Under the Gratuity Act 1972

The gratuity eligibility service as per the Gratuity Act 1972 is 5 years. However, according to a judgment from the Supreme Court and the quotation from the book mentioned below, it seems that the gratuity eligibility service is 4 years and 240 days.

Judgment from the Supreme Court

"Yes, by virtue of the judgment of the Supreme Court rendered under the provisions of the Industrial Dispute Act in Surendra Kumar Verma vs. Central Govt. Industrial Tribunal, [(1980) (4) S.C.C.433)], it is enough that an employee has a service of 240 days in the preceding 12 months, and it is not necessary that he should have completed one whole year's service. As the definition of continuous service in the Industrial Dispute Act and the Payment of Gratuity Act are synonymous, the same principle can be adopted under the act also. Hence, an employee rendering service of 4 years, 10 months, and 11 days is considered to have completed 5 years of continuous service under sec.4(2) and thereby is eligible for gratuity."

Understanding Gratuity Eligibility

We agree that the definition in the act still states 5 years; however, there are many cases where different courts have given judgments in favor of 4 years and 240 days. I believe the judges have some sense in the interpretation of this act and find it sensible enough to understand the unspoken meaning of 5 years of service.

Also, has anyone thought of putting forward a suggestion in the forum? It may not be the right area; however, if it is taken to the right area where the acts/laws can be considered for modification, it could be beneficial. A question to those who call themselves "experts": have they ever thought about why there are prevailing laws/acts? Are these for people, or are people meant for them? In my opinion, supporting cases considering 4 years and 240 days can be adopted to modify the act if put forward in the right forum. Until then, even if I have to raise my voice to anyone to get things in my favor to claim the gratuity amount, I will seek support from the judgments given. I hope this will be done by others as well in all states, and then there will not be any question of validity in specific areas only.

We are not advocates here, and the forum is not for advocates who run the show based solely on black and white. We are human resource personnel who have to consider what is right and wrong and whether we can modify/alter things by giving or proposing in the right direction.

Thanks.