Gratuity Act Confusion: Does 190 Days in the Sixth Year Affect Eligibility?

Dear All Seniors,

My question pertains to the Gratuity Act. If a workman continues duty for 5 years and, after the initial 5 years, completes an additional year with 190 days of work, would they still be eligible, or does this break service?

Thank you.

He or she must have been employed for nearly 190 days in a mine or coalfield-like institution (where the work term is just 6 months) and 240 days in other fields.

Mukesh Singh Dewda, your question is not clear. An employee who has worked for 5 years is entitled to receive gratuity when leaving the organization. Then what is "after 5 years one year 190 days..." and break in service?

Understanding the 190 Days Rule

This 190 days rule applies to employees working below the ground in mines and establishments operating for 5 days a week. However, it is also relevant for daily wage employees because all other employees receive a salary for 30 or 31 days in a month. Actually, the 240 days or 190 days concept applies only to daily-rated workers and not to employees who are paid for the entire month even if they have holidays.

Mukesh Singh Dewda,

Mr. Madhu is right; your question is not clear.

An employee who has worked for 5 years is entitled to receive gratuity, provided all five years are continuous. The question of a service break is out of the question. If the employee worked 190 days in the 5th year and attained superannuation, they are eligible because it is considered a full year of work.

Hi Mukesh,

The Gratuity Act in India states that an employee is eligible for gratuity if they have completed at least 5 years of continuous service with the same employer. However, the Act also specifies that if an employee has worked for a continuous period of 4 years and 190 days, it will be considered as 5 years for the purpose of gratuity calculation.

In your specific case, if a workman has continued duty for 5 years and then worked an additional 1 year and 190 days, they would be eligible for gratuity as they have completed the minimum requirement of 5 years of continuous service. The break in service would not affect their eligibility as long as they have completed the required period of service.

It's important to note that the specific details of the employment contract and any company policies regarding gratuity should also be taken into consideration. It's always best to consult with a legal or HR professional for specific advice in such matters.

Thanks,

Sorry to correct Dr. B V Raghunath, but there is no provision under the Payment of Gratuity Act that states gratuity is payable to an employee who has worked for 4 years and 190 days in the fifth year. The Act only specifies that an employee is entitled to gratuity only when they have 5 years of continuous service. Some court verdicts (not from the Supreme Court but High Court) have interpreted that since the number of days required to constitute continuous service is 240 days in a period of 12 months for an establishment that works six days a week, or 190 days for workers engaged below the ground of a mine or for an establishment that works five days a week, an employee who has worked for 240/190 days in the fifth year would be entitled to receive gratuity.

As per Section 4(1) of The Payment of Gratuity Act, gratuity shall be payable to an employee on the termination of employment after he has rendered continuous service for not less than five years.

Accordingly, the Payment of Gratuity Act supports the completion of 5 years of service to get gratuity. However, in certain High Court rulings like those of the Madras High Court and Kerala High Court, there has been a different interpretation of the term continuous service. Accordingly, employees who have worked for 4 years and 240 days in the fifth year are made entitled to gratuity.