Gratuity Eligibility: Leaving After 4 Years and 9 Months in a 5-Day Work Week?

In a 5-day/week work pattern, will I get gratuity if I leave the company in exactly 4 years and 9 months?

I have been offered a very good opportunity from another company. I'll recover the gratuity amount in 2-3 months anyway if I take the offer.

But, 4.9 years is a big term, and gratuity is part of my salary, so I do not want to miss out on it.

Though it was a 5-day workweek, you have been in continuous service for more than 4 years and 240 days. Undoubtedly, you are entitled to gratuity as per the Payment of Gratuity Act (PGA). To clarify, the 240 days of continuous service include the weekly holiday and other paid leaves.

The rule states 5 years of continuous service. If the lawmakers meant 4 years and 240 days, they would have said so. As far as I can understand from the letter and the spirit of the Act, a time period of 5 years should be there between the start and end of the employment, during which time one should have worked a minimum of 240 days during each year for it to be considered as a completed year. Beyond the completed 5 years, that is in the sixth year onwards, if one works 240 days, that year is considered as a completed year.

Correction to my previous post: If an employee completes more than 6 months after completing 5 years of continuous service, it is considered a completed year. 4 years and 9 months of continuous service are considered as such, but not as 5 years of continuous or completed service. Where an employee has not been in continuous service during any year within any period of his employment, it will be considered as 'continuous' service if he has worked for 240 days during that period. The 240-day rule applies only when an employee has had a break in service for some days due to any reason but has completed a 12-month period on the payroll. The 240-day applicability is solely for determining 'continuous' service, not a 'completed year' of service.

Legal Position on Gratuity Eligibility

The legal position is settled after the judgment of the High Court of Madras in Mettur Beardsell Ltd. vs. The Authority under PGA 1998 LLR 1072. Section 4 of the Payment of Gratuity Act, 1972, provides that an employee will be entitled to gratuity on completion of continuous service of 5 years. The Madras High Court, while relying upon the clarification by the Supreme Court pertaining to 240 working days in one year, deemed it to be continuous service of one year. This means that there need not be a complete 12 calendar months' service. The Madras High Court has further held that an employee who has put in service of 4 years, 10 months, and 18 days in the 5 years will be entitled to gratuity.

Supreme Court Judgment on Continuous Service

By virtue of the judgment of the Supreme Court rendered under the provisions of the Industrial Dispute Act in Surendra Kumar Verma vs. Central Govt. Industrial Tribunal, [(1980) (4) S.C.C.433)], it is enough that an employee has a service of 240 days in the preceding 12 months, and it is not necessary that he should have completed one whole year's service. As the definition of continuous service in the Industrial Dispute Act and the Payment of Gratuity Act are synonymous, the same principle can be adopted under the PG Act. Hence, an employee rendering service of 4 years and 8 months is considered to have completed 5 years of continuous service under Section 4(2) and thereby is eligible for gratuity.

Hi,

Four years and nine months are not mandatory. Five days of working in a week means you have to finish 190 working days in a year. This is enough to be eligible for gratuity (i.e., four years and 190 days).