Gratuity Eligibility: Does Completing 5 Years During Notice Period Count?

I joined my company, a services-based software MNC in Bangalore, on July 5th, 2016. I have completed 4 years and 9 months in this organization. If I resign on 15th April 2021, my last working day would be 90 days later, i.e., 14th July 2021. This means that by 14th July 2021, I will have completed 5 years. The question is, will I be eligible for Gratuity if I complete my 5 years during my notice period?

Dear Abhishek,

All rights and benefits of employment are available to an employee serving their notice period. Upon completion of the notice period, only then would the resignation become effective, thereby ending the contract of employment. Automatically, the notice period would be added to the continuous service rendered for the purpose of gratuity.

Eligibility for Gratuity

As per Sec. 2-A(2) of the Payment of Gratuity Act, 1972, and in accordance with the ratio decidendi of the judgment of the Madras High Court in the case of Mettur Beardsel Ltd v. Regional Labor Commissioner [1998 LLR 1072], if an employee completes 190 days in the 5th year of their service (in the case of an employee employed below the ground in a mine, or if the establishment works for less than 6 days in a week), or 240 days in any other case, they shall be deemed to have completed 5 years of continuous service in the establishment.

Therefore, you are currently eligible and entitled to gratuity under the Act.

You commenced your service on 05.07.2016, and you will be completing 5 years of service on 04.07.2021, whereas your service ends on 14.07.2021. As per the law, an employee is eligible for gratuity on completion of 5 years of continuous service. In the same consideration, you are eligible for gratuity since you have completed 5 years of service before leaving the company.