Gratuity Claim After Four Years: Does 1200 Working Days Qualify Under the Gratuity Act?

Can I claim my gratuity after four years of service because I have worked for 1200 days? According to the Gratuity Act, 240 days in a year are considered as present or paid days for gratuity claims.

Hi, five years of continuous service with the same employer is a must to claim gratuity. The total continuous five years of service are the criteria.

No, you cannot take the total days and divide it by 240 to establish that you have worked for 5 years. The basic requirement to qualify for gratuity is 5 years of service. Once you complete 5 years, then you can see whether each year has at least 240 days so that you can assure continuous service.

As per the High Court judgment, a minimum of 4 years and 240 workdays is required to achieve the same.

Sandeep Tomar
Head HR, Legal, HR, HRBP

Eligibility for Gratuity Payment

Minimum four years of continuous service and at least 240 workdays in the fifth year shall qualify you to receive payment of gratuity.

There are two high court verdicts, Mettur Bearsel's case from the Madras High Court and Sreeja's case from the Kerala High Court, which state that 240 days of service in the fifth year shall qualify for gratuity. However, there is no such verdict from the Supreme Court, nor has there been any amendment made to the Payment of Gratuity Act based on these judgments. The dictum of a court should be considered as a precedent, but I do not believe that it establishes a law. Based on these judgments, the controlling authorities of the Payment of Gratuity Act in these states may issue orders, but it is a legal matter whether it will have universal applicability. It can be used as a citation but does not constitute an established fact.

A plain reading of the Payment of Gratuity Act reveals that 240 days in 12 months would only ensure continuous service. Therefore, it should only be considered in determining whether the employee has continuous service and not for determining their qualifying service. The qualifying service is five years, and within these five years, each year should consist of at least 240 days. However, the aforementioned verdicts have considered 240 days to constitute a year's service. This is a debatable point.

Hi, I would like assistance in determining my eligibility for gratuity based on my employment dates. I was employed with my most recent company from December 4, 2017, to August 19, 2022. I want to know if the previous 6 months, starting from December 4, 2022 (which marks the completion of my 5th year), are considered for determining "continuous service," or if the 12 months from December 4, 2022, are considered. If the 6-month period is considered, I would not meet the criteria of 120 days. However, if the 12-month period is considered, I would meet the criteria. Therefore, I need assistance in determining whether I am eligible for gratuity.

I am referring to this document: https://labour.gov.in/sites/default/...ty_act1972.pdf

Thanks,

Regards, Prasanth

You have 4 years (from 4th December 2017 till 3rd December 2021) and 8 months and 15 days (from 4th December 2021 till 19th August 2022) of service. The fifth year accounts for more than 240 days of service. If you had no loss of pay leaves, then applying the principles and interpretations in the above-referred cases, i.e., if the employee has worked for 240 days in the fifth year, you will qualify for gratuity.

An employee had worked in an organization for 12 years. During the 12-year service period, he had completed 240 days only in four years. The rest of the time, his working days were below 240 days each year.

Is he entitled to gratuity for the 12-year service period?

If the service break was recorded, then he will not get gratuity. What is required is that the employee should be in service. An employee will be in service even if he is not employed. If the service is broken by way of a letter, then he will lose gratuity. At the same time, the employee will be in service, but during 12 months, he may be employed for less than 240 days. In such an eventuality, the employee is deemed to be in service, and he will be entitled to get gratuity.