Am I Eligible for Gratuity After 4 Years and 9 Months in a PSU? Urgent Help Needed!

I joined a PSU on 2nd September 2013 and am now shifting to a private organization. My last working day in the PSU is 15th June 2018. The total working period in the PSU is 4 years, 9 months, and 13 days. Am I eligible for Gratuity? My illiterate HR personnel are saying that 5 years are required. Kindly help; it's urgent.

Dear Vivekcorporate1990,

On this forum, most of the literate HR people will give an answer in your favor. However, your less literate HR colleagues are also correct. In your case, 5 years of completed service is required unless you fall under the jurisdiction of Madras HC or Kerala HC.

I apologize for responding in your language.

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Professional courtesy demands that wordings like "illiterate HR" be eschewed in a forum like this dedicated to improving HR knowledge and practices. The law states that 5 years of continuous service with 240 days worked in the last year of service are required for gratuity eligibility.

Many individuals are relying on a single Madras court judgment to assume that even if you have less than 5 years of service, you automatically qualify for gratuity. However, in my opinion, you are not entitled to gratuity.

Kindly note that it is essential to adhere to the legal requirements and not base assumptions on singular court rulings.

Professional Courtesy and Interpretation of Supreme Court Judgment

When our learned member Nathrao expressly mentioned that professional courtesy demands avoiding phrases like "Illiterate HR" in a forum dedicated to improving HR knowledge and practices, I understood the importance without needing a dictionary.

With due respect, Sir, I advise you to kindly read and interpret the Supreme Court Judgment. You can also review my comments on the said judgment in my various posts. I do not wish to repeat them here.

Clarification on Misleading Information

Corporates have paid me for providing legal opinions on the issue of Gratuity. I am here on this forum with more than 2400 posts, responding to members' queries honorarily, sharing knowledge, and gaining insights from people like you.

I have delivered 64 lectures on various Labour Laws to Corporates and HR professionals across the industry, as well as lecturing in colleges. No one has ever told me that I misguided them.

I always appreciate that one can have a different view or perception of any issue, but it should be supported with appropriate justification. You are free to stand by your own view or perception and seek your due right from the court of law.

Regards,
Keshav Korgaonkar
Advocate High Court Mumbai

Dear Sir,

I have gone through multiple forums, and each one has unanimously stated that if a person has served 240 days in the fourth year, he is eligible for gratuity. I haven't found any of your posts on the same.

Also, the word "illiterate" HR was not used for the HR community but for 4-5 HR officials working in my corporation who are actually illiterate and just luckily got promoted from the steno level. Hope that clarifies.

Dear Azim ji,

With due respect to you as well as other members, I do not wish to discuss more on this topic. There are different views on this topic, and I have expressed my views with appropriate support many times on this forum. I am providing only one link to you below to help you form your stance on the subject matter:

https://www.citehr.com/108564-sc-jud...-download.html

Dear Vivek, the learned HR members in this forum have expressed and shared their knowledge of law and interpretation on the eligibility for gratuity. The Apex court judgment may strengthen your case if you fight it out in the court of law. However, since the service eligibility of five years has not been amended in the Gratuity Act, the same will apply, and on that basis, the refusal by your HR to pay you gratuity is not wrong.

You seem to be expressing your anger over the refusal of gratuity by your HR to the members of this respectable forum unnecessarily and have used ungentlemanly language, which you should not have. You should express your apology, and if you don't, stop seeking free advice.

Regards, Vinayak Nagarkar HR Consultant

Do not use this kind of language, not only here but anywhere in any public forum.

Relating to your query, you are not eligible as the act very clearly states that a minimum of 5 years of service is required to be eligible for gratuity. There are two exceptions to this rule:

1. In the case of death of employees.
2. Voluntary Retirement (VR) or closure of the company.

Gratuity is payable irrespective of the period of service.

Sorry, I was working for a software firm in Bangalore, and as far as I know (this was 5 years ago - since I left the company in 2013), we were providing gratuity for employees who completed 4 years and 10 months or thereabouts. Is there any dispute about this?

Dear Keshav,

As per the Gratuity Act, 240 days mean actual working days, not your total working days. Also, please refrain from using this type of language.

Thank you.

Dear Friend, no one can claim to be completely correct. Over time, several judgments have been made regarding the interpretation of the "definition." Interestingly, various rulings have been issued, but they differ. There could have been a single "decision."

In the absence of information, someone cannot be called illiterate or treated as foolish. The case citation is different and cannot be binding for everyone unless it is considered absolute or an inherent part of the Act. In my opinion, you should challenge the matter in court against the decision of your past employer, as they did not consider your case fit for gratuity.

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 Payment of Gratuity Act are synonymous, the same principle can be adopted under the act also, and 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."

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 for a company that follows a 5-day week.

Read more at: Clarity between gratuity eligibility service (5 or 4.8 yrs)? - Gratuity - Labour & Service Law

Read more at: http://www.lawyersclubindia.com/foru...ween-gratuity-

Dear Prabhat, can you please share the full text of the Supreme Court verdict which states that 240 days in the fifth year would make an employee entitled to gratuity? Is the quoted one pertaining to Gratuity? You have stated that the definition of continuous service is the same in the ID Act and the Payment of Gratuity Act. But that is not disputed. What is disputed is whether a person should complete 5 years in order to be eligible for gratuity. It is okay that 240/190 days in a year will constitute continuous service, but that does not mean that without completing 5 years a person can demand gratuity.

Madras and Kerala High Court Rulings

The Madras High Court ruling and the Kerala High Court ruling can be quoted as a direction to pay gratuity to an employee who has not completed 5 years but has completed 240 days in the fifth year. However, that direction cannot be taken as a common ruling in the absence of an amendment to the Payment of Gratuity Act. Therefore, if an illiterate HR person has said that the thread starter, Vivekcorporate, is not eligible for gratuity, he should have said that based on what is written in the Act. Now it is up to Vivekcorporate to file a complaint before the appropriate authority and get it. At that time, he can certainly say that there is a law which says that 240 days in the fifth year make an employee entitled to gratuity, etc.

If anybody has a copy of the Supreme Court verdict, please share it here so that we can take it as a common direction applicable to all establishments in India.

Thank you for your post. I have asked several questions on this forum, but unfortunately, no one has come forward with answers yet.

Supreme Court Judgment on Gratuity Eligibility

For now, we acknowledge that there is a Supreme Court judgment stating that an employee who has served for 4 years, 10 months, and 11 days is considered to have completed 5 years of service, making them eligible for Gratuity. This SC judgment dates back to 1980.

Lack of Amendments and High Court Rulings

I am curious as to why there have been no amendments to the law regarding this matter since then. It is interesting to note that the Madras High Court ruled on this issue in 1996, while the Kerala High Court did so in 2015. If there was already a settled law based on the Supreme Court's earlier judgment, why did the High Courts in Madras and Kerala entertain the matter? Furthermore, why did they not reference the Supreme Court's judgment in their decisions?

I am attaching the Supreme Court judgment in Surendra Kumar Varma's case, as you requested.

Yes, this is a case on retrenchment, and nowhere is it mentioned that a person who has 4 years + 240 days should be paid gratuity. The definition of continuous service may be synonymous, but the application is different. The point raised by Keshav Korgaonkar is very valid. If this is available in hand, why did the Courts of Madras and Kerala not refer to it? That is why I had asked for a verdict from the Supreme Court on this issue. In the past, when this issue came up for discussion, the same case had been brought up, I remember. The link in post No. 9 will take you to our past discussions.

Dear HR Colleagues,

The issue of whether somebody who has completed 4 years of service and in the 5th year has served 240+ days can be considered to have completed 5 years of service and thus be eligible for gratuity under the Gratuity Act is not within the scope of this forum. Members can express their views, but until the law is amended to support the above interpretation, making an employee eligible for gratuity, it is pointless to prolong this discussion as it is generating more heat than light.

Regards, Vinayak Nagarkar HR Consultant