Gratuity Calculation: How Is It Affected When an Employee Passes Away After 5 Years?

Dear Sirs/Madam,

Please clarify for me, if an employee has worked for more than 5 years in the same company and then suddenly passes away, how many years will be considered for the gratuity calculation? Can they calculate until their retirement age?

Regards,
Prakash K

Dear Sirs/Madam,

Please clarify for me, if an employee has worked for more than 5 years in the same company and is still employed but suddenly passes away at the age of 33, how many years will be considered for gratuity calculation? Can they calculate until the retirement age?

Regards,
Prakash K

Dear Prakash, according to Section 4 of The Payment of Gratuity Act, 1972, it is provided that the completion of continuous service of five years shall not be necessary where the termination of the employment of any employee is due to death or disablement. In your case, he has already completed his 5 years of service, making him eligible for gratuity.

Please note that the time period of over 6 months or more is considered as 1 year, i.e., the year of service rounded off to the nearest integer. For example, if you have completed 5 years and 7 months of service, the length of service for gratuity calculation would be 6 years. Similarly, if you have completed 5 years and 5 months, the period for gratuity calculation would be 5 years.

Regards, Amit

If your gratuity scheme is managed by LIC, the deceased will be eligible for gratuity until his actual date of retirement.

Dear Shashi Kumar Nair,

Can you please clarify your statement, "If your gratuity scheme is managed by LIC, the deceased will be eligible for gratuity till his date of actual retirement"? Please give details of LIC policy that provides gratuity until 58 years, even if the employee dies at the age of 33 years, for information and implementation by all concerned.