Gratuity Eligibility: Does Skipping the Notice Period Affect 7 Years of Service?

If an employee has not served a 1-month notice period but completed 7 years of continuous service, will he/she be eligible for Gratuity? Can anyone please suggest?

Gratuity Forfeiture Under the Gratuity Act in India

Section 4(6)(a) of the Gratuity Act in India states that the amount of gratuity payable to an employee can be forfeited by the employer if such employee's services have been terminated for any act, willful omission, or negligence, causing damage, loss, or destruction to property belonging to the employer, to the extent of the damage or loss so caused.

Section 4(6)(b) of the Gratuity Act states that gratuity payable to an employee may be wholly or partially forfeited if the employee's services have been terminated due to riotous behavior, disorderly conduct, any act of violence, or for any act of moral turpitude, provided such offense has been committed in the course of his employment.

Failure to serve the notice period does not attract Section 4(6)(a) or (b).

For not giving one month's notice, there is no provision to refuse gratuity payment. If there was a clause in the appointment letter/contract stating that one month of notice period should be given on either side or salary for the notice period should be paid by either side in lieu of notice period, then in this situation, one month's salary amount can be reduced from the gratuity, and the remaining amount has to be paid to the employee.

Dr. Bijoy,

Gratuity cannot be attached even by court decree. Therefore, the question of reducing the notice period from pay will be incorrect and can be challenged legally.

The employee is eligible for gratuity in terms of service rendered. He did not serve notice period while leaving the job. The question arises: what you did in the matter is a guiding factor. Did the employee submit his resignation or remain absent?

In general, the establishment initiates action against the employee under the terms of his appointment. Where nothing has been done in this direction by the establishment but to pay, if the terms of employment have ended.

There is no doubt that the employee has completed seven years of continuous service and is eligible for gratuity under The Payment of Gratuity Act. You cannot deduct the salary in lieu of the notice period from the gratuity payable to him.

P.S. Lakshmanan
S.G. Management Services
Kolkata

Hi Sabnam,

Gratuity payment is independent of the notice period. Unless the employee has been terminated for criminal or uncivil activities, gratuity has to be fully paid to every employee who has completed 5 years of service with your organization.

Regards,
Sairam Bandi
Email - sai@kredily.com