Gratuity Confusion: Do I Need to Apply and Is There a Deadline to Claim It?

Hi, My last working day in the company was 6th Nov 2023, where I completed 4 years, 10 months, and 6 days (306 days in the last year) and exactly 5 years if I take my joining date as a contract hire. I have requested gratuity, to which they said that I will receive it, but I haven't applied in any format in the company. Is there any form I need to fill and send to them so that later they should not tell me that I have not applied for it formally? If I need to apply, then how soon should I apply?

Thanks,
Sujit

Hi, To apply for Gratuity, you need to use FORM I. Even an ordinary request on A4 paper will also be sufficient. Many companies process Gratuity based on eligibility without receiving a request letter or FORM I as well. If your total period of service, including a contract role, exceeds 5 years, then you can definitely request Gratuity. Please ensure that there is 5 years of continuity of service without any long breaks.

If the employer has assured to release Gratuity, then you need to wait after being relieved. In case of any delays, you may take up the issue legally.

Hi, my employer has said informally that I will receive gratuity, but there is no documentation. I am concerned that if I don't apply, they might later claim that the time limit has passed. My last working day was November 6, 2023, so it has already been 44 days. I want to apply to ensure everything is correct from my end. Should I send an email and an application form via speed post? Will that be sufficient?

Also, my case is a bit different. If I include my contract hire, I have completed 5 years and 1 day (my normal hire followed immediately after contract hire, so it was continuous). If I only include my normal hire, it is 4 years, 10 months, and 6 days, i.e., 4 years and 301 days.

But my employer has informally told me I will get gratuity. As per the law, am I not eligible considering #1 / #2? Thanks.

Hi, If you are not sure of the employer's stance and want to document communications related to gratuity, it is best to submit a request letter for gratuity along with the full and final settlement. You can either submit the letter in person and obtain an acknowledgment from the employer in a duplicate copy or send the request letter via Registered Post with Acknowledgment Due. Considering you were on the regular payroll for 4 years and 10 months, with a 2-month contract, the employer should acknowledge gratuity, and your date of joining (DOJ) should be your initial joining date with the employer.

The Gratuity Act

The Gratuity Act applies to factories, mines, oil fields, plantations, ports, railways, motor transport undertakings, companies, shops, and other establishments employing 10 or more workers. Therefore, it is essential to confirm that your establishment falls under the purview of the Gratuity Act.

Gratuity Payment Obligation

Gratuity due to an employee who is entitled to receive it should be paid by the employer within 30 days of the employee leaving the company, even if the employee has not demanded the same. Therefore, the company's assertion that you should apply in a prescribed form is not maintainable. It is the responsibility of the employer to locate the departing employee and provide the gratuity. As Lakshmi Narayanan rightly noted, you can submit a request for gratuity using Form I (attached) and ascertain whether the company will make the payment.

Clarification on "Contract Hire"

Please clarify the meaning of "Contract hire." If you were initially hired on a fixed-term contract (not under a third-party payroll), then the date of joining the employer organization as a fixed-term contract employee should be considered your start date.

Understanding Gratuity

Gratuity is a work benefit that companies provide to employees based on their years of service with the company. You usually don't need to apply for it—your employer is responsible for calculating and giving you the gratuity you're owed. Just keep in mind that the rules can differ depending on where you are.

Typically, there's a minimum time you need to work for a company to qualify for gratuity, often around five years. If you leave your job before reaching this minimum, you might not receive gratuity.

To know the specifics for your situation, check your work contract, company rules, or the labor laws in your area. If you're unsure about gratuity, talking to your HR department or seeking legal advice can help you understand your rights.