Gratuity for Rehired Seniors: Is It Applicable for Employees Over 60?

Dear Seniors,

Is gratuity applicable to senior citizens aged over 58 years? Recently, our organization re-appointed an employee (aged 60 years) after his retirement.

Thank you.

Superannuation and Reappointment

The age of superannuation is not yet determined by any law. Retirement upon attaining the age of superannuation is the only service condition mentioned in the Standing Orders or Service Regulations of the establishment and is fixed thereto. Attaining the age of superannuation does not entail automatic retirement from service; the employer has to effect it. If a person of 60 years of age has been reappointed, it means that he was already in the service of the establishment, either yours or elsewhere, got retired at the age of 58 years or so, and then he has been employed afresh.

Eligibility for Gratuity

Eligibility for gratuity under the Payment of Gratuity Act, 1972, is based on the factors of length of continuous service under the same employer and the mode of termination of employment. Except for death, all other modes of termination do not curtail re-employment of the same person. Therefore, irrespective of the age as well as earlier settlement of gratuity in the same establishment or elsewhere, a person reappointed is entitled to gratuity in his second or subsequent tenure also if he completes the minimum qualifying service.

Regards

A person above the age of 60 years is entitled to gratuity. Gratuity is to be calculated based on the length of his service and not his age.

Check www.labourlawhub.com for more information.

Greetings!

An employee is eligible for gratuity once he/she completes 5 years (4 years 10 months and 11 days) of continuous service in an organization. It has nothing to do with age.

Hope it helps.

Regards,

There is no age restriction on the payment of gratuity. The only criteria are that one should work for 5 years of service.

Please let me know if you have any further questions.

There are a lot of views on the minimum of 5 years of service to become eligible for Gratuity. Please let me know if, as stated by Kanika Kapoor, 4 years 10 months and 11 days is deemed as 5 years of service. Is there any notification on this issue?

There is no age limit in the Gratuity Act. One should be an employed person and should complete 5 years of service for eligibility for payment of gratuity.

Dear sir,

I have a query related to gratuity. Can an employee drawing a basic salary of 100,000 be eligible for gratuity?

Eligibility for gratuity is not linked to the quantum of salary drawn by an employee. However, if the last-drawn salary comprises basic salary and various allowances, only basic and dearness allowance have to be taken together for the purpose of computation of the concerned employee's gratuity on the termination of his employment. If the salary is a consolidated one, then the entire amount has to be taken into account.

A cap on gratuity is provided in respect of the total amount payable. Regardless of the sum total of basic + D.A., the maximum amount of gratuity would be limited to the ceiling prescribed under section 4(3) of the Payment of Gratuity Act, 1972, which is Rs. 10 lakh at present.

As rightly pointed out above, even if an employee draws Rs. 1,00,000 per month as basic, he will be entitled to gratuity provided that other conditions are fulfilled.

Age restriction in the payment of gratuity

Is there any age restriction in the payment of gratuity? If an employee is aged more than 60 years, are they entitled to gratuity after rendering five years of continuous service?

Dear Das,

There is a statutory restriction on the age of entry into any paid employment but no mandate on the age of exit. Gratuity is an employment benefit particularly entitling an employee upon the termination of their employment after a spell of minimum qualifying service under the same employer. If the age of retirement on superannuation is prescribed under the contract of employment or service regulations applicable, that should normally be followed. There can be an extension of the services of an employee for some more time out of necessity, subject to the willingness of both the employer and the employee concerned, in which case the extended service should also be taken into account for the purpose of computation of gratuity. Therefore, the age of the employee on the date of termination of their employment cannot be a factor in the matter of gratuity.