Gratuity Calculation Dilemma: Should We Use His Last Working Day or His Death Date?

A contract workman has been working in the organization for the past 15 years, and his last working day was on 31.01.2017. Due to his disease (cancer), he was unable to work, but he received ESI (90% of wages) from 01.02.2017 to 27.11.2018. For the calculation of gratuity, which date should be taken - his last working date or his death date?

Dear Alex,

Since you have stated that his last working day was 31.01.2017, only consider his last working day for Gratuity calculation.

Date of death will be the last working day: 27 Nov 2018.

As per Section 4 of the Payment of Gratuity Act 1972, gratuity becomes payable on the date of termination of service. While on ESI benefit period, one is still in service, and the termination of service has happened only on 27th November 2018.

Hi,

Whichever took place earlier will be the date for the calculation of Gratuity (last day at work or death). The Payment of Gratuity Act is not concerned with what ESIC does to its subscribers.

Thanks and Regards

Combined reading of sec 2A and 4 of POG Act shows that the date of death is the date to be reckoned if the employee has not resigned or was not terminated from the last working day.

Varghese Mathew
Labour Law/HR Adviser
Tvm

Unless there is a termination on medical grounds, the employee remains in continuous service covering the period of sickness. Hence, in this case, the gratuity is payable until the date of his death.