Gratuity Eligibility After Employee Death: How to Handle Cases with Less Than 240 Days of Service?

Dear Members of this forum,

Eligibility for Gratuity in Case of Employee Death

a) An employee died after 6 years of service, and he has not completed 240 days of working in any of the years. What is his eligibility for gratuity?

Handling Cases with Less than 240 Days of Service

b) How to deal with such cases where 240 days of working is not there? Do we need to communicate with employees to mention a break in service as per the provisions of Section 2A?

Request views of experts.

Thanks & regards,

Dear friend,

I think that a deep re-reading of the entire provisions of section 2-A of the PGA, 1972 may help you resolve this issue. Unauthorized absence from work is the only reason to be attributed to the employee's own action, depriving him of his eligibility to claim continuous service of 240 days in any block of a 12-month period for the purpose of Gratuity under the Act. The reason, as you know, is simple: a violation of the contract of employment, which would automatically call for disciplinary action that may result in a minimum punishment of a break in service as provided for in the service regulations. This is exactly what is stated in the deeming provision of sec. 2-A of the Act.

Therefore, each and every spell of unauthorized absence in every year has to be declared as a break in service after formal disciplinary proceedings to exclude the same in the calculation of 240 days for that year, so as to deprive the absentee of his gratuity for that particular year. This should be the procedure for cases mentioned in part (b) of your query, which would equally apply to any deceased employee with more than 5 years of continuous service.

However, why can't the employer be magnanimous enough to relax this in the case mentioned in part (a)?

In addition to what our senior member Umakanthan Sir has said, I would also like to mention that 240 days in 12 months is not exactly the number of days the employee should have been physically present for work. It shall include all paid leaves, paid weekly off days, paid holidays, and days on which the employee could not come to work due to any accident during the course of employment. In respect of a woman employee, 240 days shall also include the maternity leave period.

With 52 days of weekly off, a minimum of 10 days of national and festival holidays, and leaves admissible as per the Factories Act or the Shops and Commercial Establishments Act, as applicable, the number of days physically present to complete 240 paid days is even less than 180 days. It is unfortunate that you have not initiated any disciplinary action against such an employee who is very irregular or is a habitual absentee. It is surprising that you allowed him to continue for six years. I am afraid, have you given him a salary increment every year? If so, that itself would establish that his absence was with your permission and the service could be regularized. The legality of this can be questioned, but if the dependents of the deceased employee defend your decision to disallow gratuity on the basis of not having completed the minimum number of days, i.e., the 240 days concept, saying that the deceased was never charge-sheeted for his habitual absenteeism nor was denied a salary increment, you will be unanswerable.