Gratuity is a statutory terminal benefit of employment available to an employee on his superannuation or retirement or resignation or on his death or disablement due to accident or disease for a blemishless and long duration of not less than 5 years of continuous service as per the provisions of sec.4 of the Payment of Gratuity Act,1972.. However, in the cases of death or disablement due to accident or disease, the first proviso to ss (1) of Sec.4 categorically states that the minimum qualifying service is not required and as such the implication in this regard is that the gratuity has to be calculated based on the actual service rendered by the employee on the date of his death or disablement as per the formula set down u/s 4(2) of the Act. The formula for computation of gratuity revolves around the factors of the no. of completed years of service and the last drawn wages only. Thus eligibility for gratuity generally arises from the nature of termination of employment whereas entitlement to gratuity arises particularly from the no. of completed years of service. In the given example, though the nature of termination of employment i.e., "death" while in service makes the employee "eligible" for gratuity, the actual service rendered by him being only 3 months i.e., less than a year in the establishment, strictly speaking, takes away his "entitlement" to gratuity. That's why the Central as well as various State Rules of Gratuity prescribes the submission of nomination form for gratuity by the employee who completes one year of service in the same establishment. If the poster's magnanimity compels him, he can treat the 3 months service as one year, compute the gratuity as per the formula and pay to the deceased's family with some ex-gratia.