Gratuity Eligibility: Can You Qualify After 4 Years and 6 Months in a 5-Day Workweek?

Hi Team,

I would like to know if anybody has served the company for 4 years and 6 months (190 days), would they be eligible for gratuity if the company operates 5 days a week.

No.
As per the laid-down law, you have to serve 5 continuous years.

Judgment from Supreme Court

"Yes, 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 act also. Hence, an employee rendering service of 4 years, 10 months, and 11 days is considered to have completed 5 years of continuous service under sec.4(2) and thereby is eligible for gratuity." Quotation from the book: Law Book (Bare Act, 2004) i.e. The Payment of Gratuity Act, 1972 (Publisher: Law Publishers () Pvt. Ltd. 18A-S.P. Marg, Post Box-1077, Allahabad-211 001. Phone: [Phone Number Removed For Privacy-Reasons] Fax-0532-622276.

Eligibility for Gratuity

1. 4 years and 6 months (190 days = 1 year) where the company follows a 5-day week.
2. 4 years and 8 months (240 days = 1 year) where the company follows a 5-day week.

The payment of gratuity (second amendment) act, 1984 clarifies this. One needs to calculate the number of years and service completion as follows. A company which follows a 5-day week:

- Doj 1.05.2000 - 01.05.2000 to 30.04.2001 - worked for 190 days
- 01.05.2001 to 30.04.2002 - worked for 190 days

If we go by the above formula and if the person does not have any break in service, they will be eligible for gratuity on 01.11.2004.

Could you please clarify on it?

Gratuity Eligibility as per the Gratuity Act 1972

The Gratuity eligibility service as per the Gratuity Act 1972 is 5 years. However, according to the Supreme Court judgment and the quotation from the book mentioned below, it seems that the gratuity eligibility service is 4 years and 240 days.

Judgment from the Supreme Court

"Yes, 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 act also. Hence, an employee rendering service of 4 years, 10 months, and 11 days is considered to have completed 5 years of continuous service under sec.4(2) and thereby is eligible for gratuity."

Law Book Reference

As per the Law Book (Bare Act, 2004), i.e., The Payment of Gratuity Act, 1972 (Publisher: Law Publishers (Pvt. Ltd. 18A-S.P. Marg, Post Box-1077, Allahabad-211 001. Phone: [Phone Number Removed For Privacy-Reasons], Fax: [Phone Number Removed For Privacy-Reasons], website: lawpublishersindia.com), the eligibility for gratuity is as follows:

1. 4 years and 6 months (190 days = 1 year) where the company follows a 5-day week.
2. 4 years and 8 months (240 days = 1 year) where the company follows a 5-day week.

The Payment of Gratuity (Second Amendment) Act, 1984 clarifies this.