Are Permanent Workers Misusing Gratuity? Seeking Advice on Eligibility and Industry Impact

Understanding the Payment of Gratuity Act

We are aware that the Payment of Gratuity is a welfare measure provided for the benefit of the workers/employees under the Payment of Gratuity Act.

Eligibility for Gratuity

The workers who have put in continuous 5 years of service become eligible for gratuity. The gratuity is payable for 15 days for every completed year of service, calculated based on the last drawn salary. A completed year of service means that the worker has to attend his duties for a minimum period of 240 days in a calendar year.

Current Practice and Issues

All the Budli workers who have completed 240 days are eligible and receiving their gratuity. Additionally, all the permanent workers who have not even worked for a minimum period of 240 days are also paid gratuity.

Since the provision of the Act is not so clear to us, certain sections of permanent workers are misusing this welfare measure of the Government by not attending their duties willfully but receiving their gratuity payment.

Though the worker can get his work continuously, he voluntarily absents himself from the duties and engages in other business activities. Some permanent workers work only for 2 to 3 days in a calendar year but claim gratuity for 15 days in the year.

Impact on the Industry

The industry is incurring huge losses because of paying gratuity for 15 days in the year against the actual working of 2 to 3 days. Apart from the financial loss due to heavy absenteeism, production is adversely affected due to idle machinery.

Seeking Suggestions

Therefore, can we insist that the permanent workers also register 240 working days in a calendar year to qualify for payment of gratuity for that particular year? We seek valuable suggestions in this regard.

Regards, T V S N Raju

Dear Friends,

I have worked for 7 years in a company, and I was denied gratuity by my ex-employer after resigning from the job. Referring to the Maharashtra Civil Service, please find the following G.R. references:

Read -
1. Government Resolution No.: Senive-1009/CR.31/SER-4, dated 05th May 2009.
2. Government Resolution No.: Senive-1009/CR.69/SER-4, dated 21st August 2009.

I am unable to access the above Government Resolutions (GRs). Please assist me in finding the relevant source of information to claim my gratuity.

Thanks,
KMR

Provision for Break in Service Under the POG Act

There is a provision in Section 2A of the POG Act to treat some absences without wages as a break in service. You can do so by issuing an order to such employees, but only if there is a provision for it in your leave rules or terms of appointment. If you do not have such a provision, it is advisable to establish one now. Absences treated as a break in service will not be counted as continuous service. Excluding such absences, if the number of days worked in a year is less than 240, the employee will not be eligible for gratuity for that year.

Dear Mr. Raju,

Before making Gratuity Payment to an Employee, the Employer has to conduct due diligence regarding the claim application. The proper procedure must be followed before approving the payment. In years where the Employee has not worked or earned a salary for at least 240 days, they will not be eligible for Gratuity for that year. Therefore, it is essential to follow the due procedure.

Thank you.

Thank you for your valuable suggestions and advice.

My query pertains to the amendment of the Gratuity Act in the year 1981, which was officially notified in 1984. Following the amendment, regardless of the number of working days of an employee (not necessarily meeting the requirement of 240 days as per section 2(c)), it becomes the responsibility of the Management to provide gratuity. How can this be substantiated in a court of law for argumentative purposes? Are there any recent case laws that could be referenced in this context?

Best Regards,
T V S N Raju

Dear Raju, Please note that Section 2(c) defines "Continuous Service" as continuous service as defined in Section 2A. Please note that your statement that the employer is liable to pay gratuity even if the employee has not worked for a minimum of 240 days is not legally tenable and contrary to the provisions of the Act. The matter should be taken up with the Controlling Authority, and later on with the Appellate Authority and the High Court. Has the Controlling Authority given any such directions? Please share correct details about the case.

Thank you for your suggestion. I would like to know the exact criteria for the amendment of the Gratuity Act during the year 1981 concerning continuous service and the payment of gratuity when an employee is on permanent rolls but has less than 240 working days, taking into account criteria such as paid leave, etc. Please let me know.

Best Regards,
T V S N Raju.

Dear Mr. Rajugaru,

Please go through the bare Act of The Payment of Gratuity Act, 1972 together with amendments and revert. Please also let me know the purpose of your question.