Gratuity Eligibility: Do I Qualify After 4.7 Years in a 5-Day Workweek Company?

Dear Sir/Madam,

I have worked in a 5-day company from 23rd April 2012 to 18th Nov. 2016. Do I get the gratuity?

Regards,
Kunal Malik

Understanding Gratuity Eligibility

An employee rendering continuous service for a period of 240 days in a year will be deemed to have continued in service for 'one year' as stipulated by Section 2A of the Act. Thus, an employee who has been in service for 240 days in the fifth year subsequent to the first four years should be deemed to have completed continuous service of five years. His claim for gratuity is tenable.

Hence, any employee serving a continuous service of 240 days in a year will be deemed to have continued in service for one year. Refer to Sections 2(a), 2(b), 2(c), and 2(e) of the Payment of Gratuity Act, 1972. As cited above, one needs to complete 240 days in the fifth year of service to be eligible for gratuity.

Calculation of Gratuity

(BASIC + DA / 26 days in a month) x 15 x No. of completed years of service. [15 is the 15 days' wage for every completed year of service]. If your total number of days = 240 * 5 = 1200 days, then you are eligible for gratuity.

Thanks & Regards,
Khirod Kumar Linka

Yes, you are eligible since you have completed 4 years and 190 days for an establishment where the working days are less than 6 days a week.

You have mentioned that you worked from 23rd April 2012 to 18th November 2016 in a company, performing for 5 days a week. Your total period, which qualifies for the payment of gratuity, amounts to 4 years, 6 months, and 25 days. This calculation is for employees working in an organization that operates 6 days a week. Since you are in an organization working 5 days a week, you are definitely eligible for gratuity payment. The Madras High Court supports these contentions.

Regards,
BS Kalsi

Understanding Gratuity Eligibility: Counting Work Days

I think the biggest doubt you have is in counting the days for having worked in the last year. The number of days (240 in the original act and 180 days in the court decision) was based on the assumption that the organization has a 6-day working week - basically one weekly off as required by the law.

If your organization has a 5-day week, the additional weekly off is counted as working and present. Further, all leave (approved or unapproved) during the period is also counted as working unless the absence results in a "Service Break," which would be clearly defined as such in the Standing Orders. A service break, if defined in the HR Manual of the company, would not count as a service break under the gratuity act.

Regards