Gratuity Calculation Dilemma: Should We Count 20 Years or Just 18 for Retirement?

Dear Seniors,

Greetings!!!

Please guide me in Gratuity Cases. A person has completed 20 years of service, and now he is going to retire. He has had continuous service, but in the middle, for one or two years, his working days were less than 240. So please guide me on his gratuity calculation - should we consider his 20 years or 18 years?

If his working days are less than 240 in the last year, what can we do in this case?

Thanks & Regards,

Jagdish

You need to calculate gratuity for 18 years only. Less than 240 days of service in a year may not be accounted for in this calculation.

Thank you.

Dear friends, I am working with a Central PSU. Here, annual increment and promotion dates will be postponed in compliance with LWOPs, but it will not affect the service for Gratuity. However, I shall quote Mr. Madhu.T.K, who posted in this regard via "https://www.citehr.com/140199-paymen...s-support.html" as follows:

In normal circumstances, a person is presumed to have continuous service if he has worked for 240 days in a year of 12 months. However, with a view to avoiding denial of gratuity to an employee who has eligible service of 5 years but has not worked for 240 days in any particular year intervening the period of 5 years, a separate ruling is in place. Accordingly, one who has worked for at least 190 days in a year and for the absence (leave without pay) no notice or warning letter has been issued to the employee will be deemed as having continuous service.

Therefore, if in the year in which he had taken leave without pay for 45 days he had actually worked for at least 190 days and for the leave without pay no notice has been served on him by the employer asking him to explain why action should not be taken against him, then the year will be counted as a service year for the calculation of gratuity.

Regards,
Madhu.T.K

Abbas.P.S

According to the law:

Yes, you were right. If an employee works less than 240 days in a year, it should not be considered as continuous service. However, if an employee's service is interrupted due to sickness, leave, absence from duty (not being treated as a break in service), lay-off, strike, lock-out, or cessation of work not due to the fault of the employee, then these have to be taken into account for calculating the continuous service.

Even after calculating all these factors and the employee still did not cross the 240-day mark, then that employee is not eligible for gratuity. Hence, you have to pay gratuity for the years where he completed continuous service of 240 days in a year.

My View:

The above-mentioned employee rendered 20 years of service. So, I would suggest that if there is any valid reason for his absence in those 2 years, please consider it and pay gratuity for 20 years if possible. As HR professionals, it is our responsibility to send our retired people with great honor and full satisfaction in the F&F settlement.

With Regards,

Mr. Thumbs Up