Confused About Gratuity: Do I Need 240 Working Days Each Year or Overall?

Hello everyone!

I'm a fresher in this field. I have one query about gratuity. Is there a need to complete 240 working days for the calculation of gratuity for that year, or is there a need to complete 240 working days in any preceding years for the calculation of gratuity for the whole service? Please help me. I'm getting confused.

Thank you & regards,
SanketFresher

Dear,

Regarding your query mentioned above, I would like to inform you that an individual who has completed continuous service of 4 years and 240 days is eligible to receive gratuity.

If an employee has not completed their 5th year but has completed 240 days or more in that year, they are still eligible to receive gratuity.

Thank you.

Thank you, Sandi_Joshi.

One of my senior employees told me that if any employee hasn't completed 240 working days in any year of his service period, then that year will not be considered when calculating gratuity. Is that true?

Dear, Gratuity does not depend on payable days; it depends on continuous service of 5 years and above. Regarding what comes under 5 years, I have explained it to you in an earlier message.

Understanding Gratuity Calculation

On the termination of employment as stipulated in Sec. 4(1) of the Payment of Gratuity Act, 1972, gratuity is payable for the entire length of service rendered by the concerned employee up to the date of termination. Hence, the determination of the length of service for the purpose of gratuity has to be calculated backwards, only preceding the date with reference to which the calculation is to be made.

Definition of "One Year" for Gratuity Calculation

"One Year" for the purpose of calculating gratuity means the period of 12 calendar months preceding the date of calculation, not the conventional year comprising the 12 months from January to December or any other calendar or financial year in vogue.

Eligibility Criteria: Continuous Service Requirement

In such a block of 12 calendar months preceding the date of calculation, to be entitled to gratuity, the employee ought to have rendered continuous service of 240 days in that block. These 240 days do not mean a continuous stretch of working days alone but include permissible interruptions, namely, interruptions due to (1) sickness, (2) accident, (3) leave, (4) absence from duty without leave not treated as a break in service as per the rules of the establishment, (5) lay-off, (6) strike, (7) lockout, and (8) any other cessation of work not due to the fault of the employee.

Hope I've clarified your doubts.

Regards

First of all, as a fresher, how are you concerned with gratuity cases? It would be better to clarify the position you are in and how you are related to gratuity. Instead of posing an academic query, if you had described a specific problem, you could have received well-considered opinions from experienced members.

Regarding your senior colleague's statement, initially inquire about what happened to the remaining 125 days in that year within the 5-year period. Did that period include sickness, accidents, leaves, layoffs, strikes, lockouts, cessation of work not due to any fault of the employee, unauthorized absences, or suspensions by management, etc.? Various aspects need to be considered, even if the employee has not served for 240 days in any year of the 5-year period.

Understanding Continuous Service

Therefore, it would be beneficial to read the definition of "continuous service" as contained in sec. 2(c) of the Payment of Gratuity Act. If you still have doubts after reviewing the definition, you are welcome to seek clarification. If your senior employee has not examined that definition, you can suggest that he refresh his views after understanding the definition of continuous service.

Regards