Gratuity Dilemma: Can You Claim It If You Resign Just Before 5 Years of Service?

Can gratuity be paid if an employee resigns 10 days before his 5 years of service in the organization? If he's ready to serve one month's notice period also.

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Can gratuity be paid if an employee resigns 10 days before completing 5 years of service in the organization, even if he is willing to serve the one-month notice period?

Gratuity Calculation for Service Tenure

For gratuity purposes, service up to the last day is counted irrespective of the nature of tenure.

As per the Supreme Court guidelines, gratuity shall be payable to any employee who has put in 5 years of continuous service, i.e., those who have put in 4 years and 240 days in the fifth year of service are eligible to receive gratuity.

As per Sec. 4 of the Act, gratuity shall be payable to an employee upon the termination of their employment after they have rendered continuous service for not less than 5 years on their superannuation, retirement, resignation, or in the event of their death or disablement due to accident or disease (provided that the completion of continuous service of five years shall not be necessary where the termination of employment is due to death or disablement).

So, in essence, if an employee works for 4 years and 240 days in the fifth year, they shall be eligible for the payment of gratuity.

In this regard, you can refer to the case of 1998 LLR 1072 Mettur Beardsell Ltd., Madras Vs. Regional Labour Commissioner (Central), Supreme Court of India.