Can My Company Deny Gratuity if I Resign Before Completing the Notice Period?

I work for an MNC where the eligibility for gratuity is 4 years and 240 days. I joined at the start of April 2015, and based on this, I will be eligible for gratuity by the end of December 2019 (considering some buffer). However, if I resign from my job in September 2019, I will complete the gratuity eligibility in December 2019 and also serve the 3 months' notice period as per company requirements. My questions are as follows:

1. Can the HR play any part in stopping my gratuity by relieving me before December 2019 if I resign in September 2019? If they state that they will pay my salary for the remaining months, will I receive only the salary and forfeit the gratuity?

2. Is it ethical for the HR to release a resource early just to avoid paying gratuity? (Assuming the employee is a good resource and has not engaged in any misconduct or illegal activities)

Regards, Ram

Assuming December 2019 is your gratuity eligibility month, resigning in September and serving for three months until December 2019 to receive gratuity is acceptable. Regarding your three months' notice, please refer to your appointment order. Normally, all companies will have clauses in their favor. Once a resignation is submitted, it implies that the employee is not willing to continue services with the company, and the responsibility of relieving from duties lies with the employer. If your employer has a clause for termination of employment with one month's notice, they may opt for that option. Without seeing your appointment order clause, I cannot comment on your question.

Thank you.

Eligibility for Gratuity Under the Payment of Gratuity Act, 1972

As per the judicial dicta set down so far regarding the interpretation of minimum qualifying service under the Payment of Gratuity Act of 1972, if an employee completes 240 days of continuous service in their fifth year of service in the same establishment, they are eligible and entitled to gratuity as if they have completed not less than 5 years of continuous service.

Normally, the minimum qualifying service is determined by the length of service rendered by the employee from their date of entry to the actual date of exit. By implication, therefore, whatever the notice period, if any, is actually served by the employee due for exit without any buy-out, should also be included in the 240 days of the fifth year of service.

Concerns About HR Practices and Gratuity

Your doubt about the HR's preemptive attempt to deprive you of your gratuity by accepting your resignation forthwith and arranging an early relief indicates the organization's culture as well as the poor HR practice adopted under the undue influence of a particular HR. If it so happens, the move of the management would amount to a counteroffer, and they have to pay you 3 months' notice salary. Otherwise, they will have to pay you gratuity for 5 years, which may work out to an amount approximately equivalent to 2.5 months' salary comprising the sum of basic and D.A. only. I hope the concerned HR would be a good mathematician and as such probably would not venture to do so.

HR professionals are not descending from the heavens to inculcate ethics or morals into management. Mostly, they are compelled to act as the watchdogs of the interests of the managements and not the human resources. So, you only have to beware of such things!