Gratuity Dilemma: Is an Employee Eligible if They Pass Away Before 5 Years of Service?

Dear Seniors,

Please help me. If an employee dies before completing his 5 years of service (having worked for 2 years and 4 months), is he eligible for gratuity? If he is eligible, what is the service period we have to count?

Thank you.

Gratuity is payable only if an employee completes 5 years of continuous service in a company. However, in case the employee dies before reaching this period, on compassionate grounds, you can disburse 15 days' worth of pay for each year of service rendered.

An employee's death while in service is a statutorily recognized mode of termination of employment, which requires no minimum continuous service of not less than five years for the payment of gratuity. Therefore, it is a legal obligation imposed on the employer to pay gratuity rather than a matter of compassion.

Method of Calculation

In terms of the method of calculation in such a case, the employer must determine the entitlement based on a period of one year or six months as envisaged under Sec. 2-A(1) of the Payment of Gratuity Act, 1972.

Thank you.

Gratuity pay is given after 5 years of service. However, if an employee dies while in service, the company must pay the total years of service gratuity to the employee.