Gratuity Eligibility: Do Employees Need 240 Days of Service Each Year to Qualify?

In the Payment of Gratuity Act, it is mentioned that gratuity eligibility requires continuous service of 5 years. My query is, should we calculate gratuity only when an employee completes 240 days in a year? If not, should we ignore the gratuity of an employee for that year?

If this is the case, could someone kindly provide a copy of the relevant order?

Dear Hemantkumar,

As per the act, you cannot deviate to void one year for calculation just because he/she had not worked for 240 days in the year. It is about Date of Joining (DOJ) and Date of Leaving (DOL). You need to count the same tenure.

Hi Hemanth, it is actually based on your employer. It is enough if the employee works for 240 days in the preceding 12 months (after completion of the 4th year), and it is not necessary that they 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. 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.

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

You can copy-paste the below link for your reference https://www.linkedin.com/pulse/gratu...ce-rahul-kumar