Case Study: Is Gratuity Due for a 61-Year-Old Purchase Head Seeking to Leave?

Case Study: Mr. "A" joined our organization at the age of 61 in the year 2012. He received an appointment letter for the position of "Purchase Head." Now, he wishes to discontinue his job and is seeking gratuity as per the act. Is gratuity payable to him?

Hi, If Mr. A served on a full-time basis as a regular employee, then he is eligible for Gratuity. Alternatively, if Mr. A was associated with the company on a retainer contract basis as a consultant (with retainer fee paid after TDS deduction), then he is not eligible for Gratuity.

Dear Bhowmick,

I find a mismatch regarding the nature of engagement of the individual's services between the title of the query and its inputs. The expression "he had an appointment letter and his position was 'Purchase Head'" along with the detail of his joining in 2012 at the age of 61 indicates that he has been employed as a regular employee in the organization. Under the current labor laws, the age of an individual, other than a child, is not typically a restrictive factor against employment unless the minimum and maximum age for appointment are strictly prescribed in the organization's service regulations. Therefore, appointment at any age beyond the age of superannuation cannot bar the right to claim gratuity if other conditions are fulfilled by the concerned employee.

Nowadays, the nomenclature 'consultant' is very loosely used in sectors like IT and ITES, whereas the original meaning of the term consultant implied engagement of a specialist on a retainer basis under a specific contract for service.

Since his appointment letter shows that he is the Purchase Head, he is an employee. For the payment of gratuity, age is not relevant, and as such, he should be paid gratuity.

Gratuity Eligibility for a 61-Year-Old Purchase Head

Taking a person whose age is 61 years as Purchase Head, the organization must have specified in the offer letter whether he is eligible for gratuity or not.

In the absence of any such clause, he is entitled to gratuity if he had completed 5 years of service as per the provisions of the Act.

Even if the appointment order states that you are not entitled to gratuity, the employee would still be entitled to receive it, subject to the completion of the eligible service period of 5 years.