Gratuity Eligibility Confusion: Is 4 Years and 8 Months Enough for Payout?

Hi Seniors,

I need guidance from you regarding Gratuity Eligibility. I know an employee will get it after completion of continuous 5 years of service. But what about if he/she left just before completion of 5 years, say he/she worked only for 4 years and 10 months. In my organization, we are paying gratuity to those employees who are leaving after completing 4 years and 8 months of service. Is it okay?

I hope you will clarify my query.

Regards,
Ravi

The gratuity eligibility service as per the Gratuity Act 1972 is 5 years. However, based on the judgment from the Supreme Court and the quotation from the book mentioned below, it appears 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."

Dear Sir,

Thank you for the valuable suggestion. Based on the judgment, anyone who works for 240 days or more in his/her 5th year is eligible for the Gratuity. Therefore, we are following the right practice.

Thanks and Regards,
Ravi

The above judgment is not under the Gratuity Act but under the Industrial Disputes Act. There is no Supreme Court judgment on the subject in query. Some High Court judgments are there, but they are applicable in their jurisdiction only.

Varghese Mathew. 8547139493

The above-referred judgment is not under the Gratuity Act. Instead, it is on one year of continuous service for retrenchment under the ID Act. Some high courts have decided that 240 working days in the fifth year are enough to constitute five years of continuous service, but they are applicable only in their jurisdiction.

The high court judgments referred to above are also applicable in states other than those where they were pronounced as they have not been rescinded or any differing judgment has been given by any other court of law.