Gratuity in Tragic Situations: Is 5 Months of Service Enough for Eligibility?

Hi, I would like to know the gratuity eligibility in death cases.

One of our employees died. His service was 5 months until the date of death. Is he eligible for the gratuity as per the act? We want to know the minimum number of services required for gratuity in a death case.

If gratuity is payable, how many years of gratuity will be payable?

If your employer had a tie-up with LIC under the Group Gratuity Scheme (with the option of a special rider), the nominee would have received the full gratuity amount until the actual date of retirement of the deceased employee, irrespective of the number of years completed by the deceased employee.

In the absence of a tie-up with the LIC Group Gratuity Scheme, the employer is bound to pay gratuity subject to the fulfillment of the eligibility criteria as stipulated by the Gratuity Act. In the case of a deceased employee with 5 months of service, which is less than one year, strictly speaking, the nominee is not eligible for gratuity. However, the employer, on a humanitarian basis, may consider 5 months of service as one year and pay gratuity for one year, which is optional and not compulsory.

I need to know about whether gratuity is eligible for a deceased employee who had less than 5 years of service. As per the Gratuity Act, it is eligible, but a Labour Inspector mentioned that it is not eligible. Can you please clarify this for me?

Hi Sir, One of our laborers expired while on duty, and he worked with us for only 15 days. Is he eligible for gratuity as per the act? Please clarify. We have paid compensation as per the Workmen's Compensation Act of 1923.

This opinion is in case there is no gratuity policy from any insurance agency.

Gratuity Eligibility in Death Cases

The Proviso to Section 4(1) of the Payment of Gratuity Act 1972 states that the precondition of completion of continuous service of five years for the payment of gratuity shall not be necessary where the termination of the employment of any employee is due to death or disablement. So, gratuity is payable. There is no formula for calculating gratuity payable where the continuous service is less than 5 years or the minimum amount specified.

Since the employee has worked for 15 days only, you may pay one month's salary and mention it to be inclusive of gratuity. The company can have a policy regarding such cases.