There are different views with regard to treatment of qualifying service. There are two court verdicts which point out that service of 240 days in the fifth year shall be considered as one year and as such gratuity shall be paid to those who leave the organisation after rendering 4 years and 240 days of service. However, the Payment of Gratuity Act is very clear that in order to be eligible for gratuity one should have a minimum of 5 years service. As per the Act 240 days is only the mandatory service to make a year's service continuous and it has nothing to do with minimum service required to make an employee eligible for gratuity.
In both the cases, 240 days of service should include all paid holidays, paid leaves and weekly off days. In the case of female employees, the days on which she was under maternity leave should also be considered as days worked. Therefore, if your employee had worked for 282 days including Sundays and holidays, then he is deemed to have earned one year continuous service. This applies, invariably, to employees who are paid for their holidays and weekly off days and not to casual workers who are paid based on their physically present days.
Again, since gratuity is a social welfare scheme for the employees, the employer is advised to give it irrespective of whether you accept or not the ruling of Madras High Court or Kerala High Court ruling.