Gratuity Eligibility Confusion: Do 4 Years and 10 Months Count as 5 Years of Service?

Dear All,

As per Section 4 of the Payment of Gratuity Act, 1972, an employee will be entitled to gratuity upon completion of continuous service of 5 years. The Andhra Pradesh High Court has clarified that the minimum period for eligibility for gratuity payment should not be less than 5 years. The court emphasized that the phrase 'or part in excess of six months' is intended solely for computing gratuity for the subsequent year(s) after completing the initial 5 years. It was also ruled that if an employee has worked for 4 years, 11 months, and 10 days, they would not qualify for gratuity due to not completing the full 5 years.

In a related case, the Madras High Court, referencing a Supreme Court clarification regarding 240 working days within a year constituting continuous service of one year, stated that it does not necessarily have to be a complete 12 calendar months of service. The Madras High Court further decided that an employee who has served for 4 years, 10 months, and 18 days within a 5-year period is eligible for gratuity.

This information was printed in the Labour Law Reporter in October 1998.

L.C. Pal

Hi,

I have completed my 4 years and 240 days in my organization. I am short by 3 months in completing 5 years. I am serving the notice period in my organization. Am I eligible for gratuity?

Thanks in advance.

Hi, I have completed 4 years and 240 days in my organization. I am short by 3 months in completing 5 years. I am currently serving the notice period in my organization. Am I eligible for gratuity? Thanks in advance.

Hello Sir,

I have been trying to fight for my gratuity for quite some time now, but my ex-employer has been giving me the following excuses. Please advise me if I have any options to fight for it. My last argument with them is as follows:

From the Attached Opinion:

Upon reviewing the above provisions under the said Act, I am of the view that the Querist can disagree with the view taken by the Hon'ble Madras High Court. The language of Section 4(1), and particularly the words emphasized by me above, strongly suggest that Parliament consciously and deliberately prescribed a minimum employment period which an employee must complete before becoming eligible for gratuity. The words "after he has rendered continuous service for not less than five years," to my mind, lay down an absolute minimum which is not susceptible to any reduction, except in cases of death or disablement, which are specifically excluded from the minimum requirement under the proviso. When the legislative draftsman uses words in the negative such as "not less than," or "until" or "unless," they are normally treated as being imperative in character, and depending on the context in which they are used, the Supreme Court has generally treated them as mandatory.

Dear Sir,

I am very glad to know that you sought an advocate's opinion on this matter. It seems like the advocate (In his words) wants to differ with the view taken by the Hon'ble Madras High Court. In that case, it does make sense for you not to process my gratuity without challenging the Hon'ble Madras High Court's verdict.

The Advocate:

The words "after he has rendered continuous service for not less than five years," to my mind, lay down an absolute minimum which is not susceptible to any reduction, except in cases of death or disablement, which are specifically excluded from the minimum requirement under the proviso. When the legislative draftsman uses words in the negative such as "not less than," or "until" or "unless," they are normally treated as being imperative in character, and depending on the context in which they are used, the Supreme Court has generally treated them as mandatory.

I Believe:

The words "after he has rendered continuous service for not less than five years," to my mind, lay down an absolute minimum which is not susceptible to any reduction, except in cases of death or disablement, which are specifically excluded from the minimum requirement under the proviso. When the legislative draftsman uses words in the negative such as "not less than," or "until" or "unless," they are normally treated as being imperative in character, and depending on the context in which they are used, the Supreme Court has generally treated them as mandatory.

For not less than five years Vs continuous service for not less than five years

I do agree with the opinion of the advocate, but it can also be continuous service for not less than five years, and my continuous service is not less than 5 years.

Anyhow, as I accept that I am a citizen of India where legal battles can go on for years, and being a one-man army, I can't take on such a long process now to fight against a huge organization alone. I wish both myself and you the best of luck.

Sunil