Am I Legally Entitled to a Gratuity Fund After 6 Years at a Small Company?

Hi,

Recently, I have resigned from my job, and my working tenure here in this company is more than 6 years. The employee strength in this company is around 14-16 people. No Provident Fund is deducted from our salary.

I want to ask whether I am legally eligible for the Gratuity fund?

Thanks,
Jeet

Dear Jeet,

Yes, you are eligible for gratuity. According to the Act, if 10 or more persons are employed, then gratuity is payable by the company if the employee qualifies the eligibility criteria.

Regards,
Nilendra

Hi Nilendra,
Thanks allot for your reply. You have said, "If the employee qualifies the eligibility criteria."
How many criteria's are there to be eligible for the Gratuity?
What are those criteria's?
Regards,
Jeet

You should work for a continuous period of 5 years. There should not be any charges of misconduct or riotous behavior. In this case, a portion or the entire gratuity can be forfeited. This is the eligibility criteria.

Regards,
Nilendra

Hi Friends,

If a person completes 4 years and 260 days, it means he is in 4 years and 261 days, making him eligible for gratuity.

I just want to say that I am working in a private company with 14-16 employees. No PF or any other fund is deducted from our salary. Even then, am I eligible for gratuity?

Regards,
Jeet

Dear Deeshe,

The law has set a minimum period of five years of continuous service. According to the Gratuity Act, a year consists of 240 days. Therefore, if someone has worked, for example, 10 or 11 months, they may claim gratuity. The rationale behind this is that the act stipulates that if the last year of service is over 6 months, it should be considered as a full year. However, in cases where the years of service amount to 4 years and a few months, it is essential that the employee has worked for more than 240 days. Typically, such cases end up in court for a final decision.

Regards,
Nilendra

What are the procedures to withdraw the gratuity amount if I have left the company after five years of continuous service? How much gratuity will I receive?

For claiming gratuity, you have to apply using Form I. Mr. Nilendra's observation regarding eligibility is that 4 years and 240 days do not align with the Payment of Gratuity Act. However, there are some court verdicts supporting employees who left after 4 years and worked for 240 days in the fifth year. According to the Act, 5 years of continuous service is the basic requirement for gratuity eligibility. Additionally, a fraction of a year exceeding six months should be considered as one year. This means that a worker who worked for 6 years and 7 months would be eligible for 7 years of gratuity, while someone who worked for 6 years and 5 months would receive gratuity for 6 years. The mention of 240 days is essential to determine if a person was on continuous service for 5 years; they must have worked at least 240 days (above the ground) or 190 days (below the ground) in any given year.

Please find attached Form I.

Regards, Madhu.T.K

Dear Madhu sir,

I have a query. If a person is working on a particular project that is not yet completed and is in the commissioning stage, i.e., the production has not yet started, are they entitled to Gratuity?

Kindly reply, sir.

Dear All,

In any organization, an employee has to continue for a minimum of 5 years to be eligible for gratuity, i.e., after resignation or superannuation. The maximum eligible criteria as per the act is 10 persons or more. The maximum ceiling amount is ₹3,50,000.

The calculation of gratuity is as follows: last drawn (Basic + DA) * 15 * number of years / 26 (number of working days).

If the employee has been on your payroll, he will be eligible for gratuity provided he has accounted for at least five years of continuous service, irrespective of whether the project has been commissioned or not. However, an establishment will be formally formed only when the project is commissioned, and registration under the Factories Act/Plantations Act/Shops and Commercial Establishments Act is obtained.

During the construction period, labor enactments like ESI and EPF will not be applicable. Similarly, the service before the commissioning of the project will not have relevance unless otherwise provided.

Regards, Madhu.T.K

Dear Member,

With Regards,

R.N.Khola

Dear Nilendra Sir, Thanks for your reply. I want to know about those employees who have been working for a long time (more than 6 to 7 years) in a firm or company where they receive their salary through vouchers and there is no record for registered employees. In this case, can those employees raise their voice for Gratuity, PF, and ESI Fund, etc.?

Thanks
With best regards,
Raj Kumari

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Dear Deeshe,

The law requires a minimum period of five years of continuous service for eligibility.

According to the Gratuity Act, a year is considered to have 240 working days. Therefore, someone who has worked for, let's say, 10 or 11 months may be able to claim gratuity. The rationale is that if the last year of service exceeds 6 months, it should be counted as a full year. However, in cases where the total years of service amount to 4 years plus a few months, it is essential that the employee has worked for more than 240 days.

Typically, such cases may end up in court for a final decision.

Regards,
Nilendra

Employees Working Without ESI or EPF Coverage

Employees working for seven years without being covered by ESI or EPF! I understand that the company must be a one-man show establishment. The law-enforcing officers are in line with the employer. Otherwise, this would not happen. Anyway, if the employer is not providing these employees with any ESI or EPF coverage, the ESI Inspector and EPF Enforcement Officer should be involved.

Gratuity Payment

Regarding Gratuity payment, employees can claim gratuity when they leave the organization. An employer who has not granted the basic rights of employees will not provide gratuity to the employees without any outside interference. If so, they can seek assistance from the Labor Officer.

Voucher Payment and Statutory Benefits

Voucher payment of salary does not disqualify an employee from receiving statutory benefits because it is not the concern of the employee but solely the employer's responsibility. If the authorities discover that the employer has been paying employees through vouchers, they can charge the employer for not maintaining and updating the muster roll, wage register, and other required reports.

Regards,
Madhu.T.K