One of our employees joined on 1st April 2009 is retiring on 15th February 2014. Is he eligible for gratuity? Kindly give us your advice with reasons.
From India, Mumbai
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12From India, Mumbai
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According to the Payment of Gratuity Act (Sec-2(A)), if an employee completes 4 years and 240 days, they will be eligible for gratuity. In this case, the employee's date of joining was 01-04-2009, and he completed his 4th year on 01-04-2013. Until 15-02-2014, their working days were more than 240, so they will be eligible for gratuity.
Thank you.
Regards,
Abhishek Singh
(Executive-HR)
From India
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Thank you.
Regards,
Abhishek Singh
(Executive-HR)
From India
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I totally agree with the views of Mr. Abhishek and would also like to add that Section 2A of The Payment of Gratuity Act for Continuous Services itself states:
"(a) for the said period of one year, if the employee during the period of twelve calendar months preceding the date with reference to which the calculation is to be made, has actually worked under the employer for not less than--
(i) one hundred and ninety days, in the case of an employee employed below the ground in a mine or in an establishment which works for less than six days in a week; and
(ii) two hundred and forty days, in any other case;"
It clearly means that if an employee works for 240 days in a year, then it will be counted as a complete year. So, as the employee has already completed 4 years and 240+ days in the 5th year, he is eligible for gratuity.
Apart from this, I would like to mention that as you have noted that the employee is retiring on that date, it means he cannot work further as per your company rules. Otherwise, the government has revised the retirement age to 60 years, even proposed for 62.
If your organization allows him to work more, then he could complete 5 years. If your organization wants to pay him gratuity, then your organization may also award him gratuity on his retirement as he has dedicated this much time to your organization, or his retirement may be extended for 2 months as a special case. In this way, his 5 years will be completed, and you can easily pay him gratuity.
The final decision is of your organization.
Regards.
From India, Delhi
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"(a) for the said period of one year, if the employee during the period of twelve calendar months preceding the date with reference to which the calculation is to be made, has actually worked under the employer for not less than--
(i) one hundred and ninety days, in the case of an employee employed below the ground in a mine or in an establishment which works for less than six days in a week; and
(ii) two hundred and forty days, in any other case;"
It clearly means that if an employee works for 240 days in a year, then it will be counted as a complete year. So, as the employee has already completed 4 years and 240+ days in the 5th year, he is eligible for gratuity.
Apart from this, I would like to mention that as you have noted that the employee is retiring on that date, it means he cannot work further as per your company rules. Otherwise, the government has revised the retirement age to 60 years, even proposed for 62.
If your organization allows him to work more, then he could complete 5 years. If your organization wants to pay him gratuity, then your organization may also award him gratuity on his retirement as he has dedicated this much time to your organization, or his retirement may be extended for 2 months as a special case. In this way, his 5 years will be completed, and you can easily pay him gratuity.
The final decision is of your organization.
Regards.
From India, Delhi
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Thank you for your reply. I am still waiting for any amendments where 4.8 years are mentioned as the payable period for gratuity. We are all professional people and cannot get emotional about situations.
Best Regards,
Sohail Shaikh
From India, Mumbai
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Best Regards,
Sohail Shaikh
From India, Mumbai
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It is not an emotional approach; it's a practical approach for professionalism. Here, it is not a case of 4 years and 8 months. It is the case of 4 years, 10 months, and 15 days—only 45 days less. Therefore, it is better to extend his retirement until 31 March 2014 and accordingly retire him on that date with all statutory benefits.
Apart from this, as per my knowledge, there is no such amendment in the Act. It is in practice with reference to the Court's judgment only.
Regards,
From India, Delhi
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Apart from this, as per my knowledge, there is no such amendment in the Act. It is in practice with reference to the Court's judgment only.
Regards,
From India, Delhi
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I agree with my colleague, Sh. Abhishek Singh, that your employee has completed four years. For the last year, from 1st April 2013 to 15th February 2014, you need to calculate the number of days he has worked. If he has put in 240 days as specified in Section 2A of the Payment of Gratuity Act, 1972, then he shall be eligible to draw the gratuity.
Regards,
BS Kalsi
Member since August 2011
From India, Mumbai
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Regards,
BS Kalsi
Member since August 2011
From India, Mumbai
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Dear All Good Morning Please find the enclosed file regarding Madras Judgement for this type of case. I hope after seen this document, your all doubt is clear. Thank you Regard Abhishek Singh
From India
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From India
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Dear Anuj Saini. Please find attached herewith Form 'F' prescribed under PG Rules.One needs to submit the form in duplicate. BS Kalsi, Member since Aug 2011
From India, Mumbai
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From India, Mumbai
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Gratuity Eligibility Clarification
From the above, it is clear that one who has completed 4 years and 240 days is eligible for gratuity. However, some organizations follow the practice of paying gratuity only for the years in which the employee has worked 240 days or more. If an employee worked less than 240 days in any year of service, the management may choose not to pay gratuity for those particular years. Is this practice correct? Should they pay for the entire period of service? Kindly clarify.
Regards,
GIRI
From India, Hyderabad
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From the above, it is clear that one who has completed 4 years and 240 days is eligible for gratuity. However, some organizations follow the practice of paying gratuity only for the years in which the employee has worked 240 days or more. If an employee worked less than 240 days in any year of service, the management may choose not to pay gratuity for those particular years. Is this practice correct? Should they pay for the entire period of service? Kindly clarify.
Regards,
GIRI
From India, Hyderabad
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Dear Suhas Khambe, I am sorry to point out that you have copied the whole text from the Law Club of India without going through the paragraph. For example, I am reproducing some portions of your text, which read as follows:
1. 4 years and 6 months (190 days = 1 year) where the company follows a 5-day week.
2. 4 years and 8 months (240 days = 1 year) where the company follows a 5-day week.
In both cases, you have shown different numbers of days for a 5-day workweek, which is a blunder and could confuse the reader. Section 2A of the Payment of Gratuity Act, 1972, clearly states that 190 days apply when the establishment works LESS than SIX days a week, and 240 days apply when the establishment works for six days a week.
Please read before sending out such texts. I am sorry if you have been hurt, but I feel it is my duty to caution you so that such mistakes are not repeated in the future.
Regards,
BS Kalsi
Member since Aug 2011
From India, Mumbai
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1. 4 years and 6 months (190 days = 1 year) where the company follows a 5-day week.
2. 4 years and 8 months (240 days = 1 year) where the company follows a 5-day week.
In both cases, you have shown different numbers of days for a 5-day workweek, which is a blunder and could confuse the reader. Section 2A of the Payment of Gratuity Act, 1972, clearly states that 190 days apply when the establishment works LESS than SIX days a week, and 240 days apply when the establishment works for six days a week.
Please read before sending out such texts. I am sorry if you have been hurt, but I feel it is my duty to caution you so that such mistakes are not repeated in the future.
Regards,
BS Kalsi
Member since Aug 2011
From India, Mumbai
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no he is not eligibilty for gratuity because he did not complete his service 5 years completely so the employee does not eligible for gratuity in case of death the employee is eligible for gratuity
From India
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From India
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Dear All, In any year if the worker has not worked for 240 days, can we exclude that year from payment of Gratuity? Pl Clarify. Regards GIRI
From India, Hyderabad
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From India, Hyderabad
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If a person joins on 1st April 2009, he completes 5 years on 31st March 2014, and not before that. During any of these previous 5 years, if he has worked for more than 240 days, it is considered a full year. Four years and 240 days are not equal to 5 years. If the Act wanted 4 years and 240 days to be equal to 5 years, it would have said so.
Eligibility for Gratuity
To be eligible for gratuity, one has to complete a time period of 5 years from the date of joining to the date of resigning/retirement. This is how I interpret the language of the Act. Please give your opinion.
From India, Noida
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Eligibility for Gratuity
To be eligible for gratuity, one has to complete a time period of 5 years from the date of joining to the date of resigning/retirement. This is how I interpret the language of the Act. Please give your opinion.
From India, Noida
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I have also faced this situation, and there is a fair amount of controversy over the interpretation. From the spirit and letter of the Gratuity Act, it is clearly stated that an employee is eligible to receive gratuity on completion of 5 years of continuous service. The service period will then be calculated as the period from the date of joining the employment to the date of retiring/resigning from the employment. So, first and foremost, there has to be a period of 5 years of service.
During this period of a minimum of 5 years of service, if in any calendar year of 12 months, the employee, for reasons given, has not completed 365 days of work but has completed 240 days (or as applicable), then it will be considered that the employee has completed continuous service for that year. So, if an employee joins on 01/01/2000, he completes 5 years on 31/12/2004, and becomes eligible on 31/12/2004, and not before that. During any of the years 2000, 2001, 2002, 2003, or 2004, if the employee did not work 365 days but worked 240 days, it will be considered as a full year. However, if the employee resigned on 31/08/2004, though he would have worked more than 240 days in 2004, it will not be considered as a full year in 2004, and so not 5 completed years. Thus, he would not be eligible for gratuity.
If the lawmakers intended that such a person should be eligible for gratuity after working for 4 years and 240 days, the law would have said so, and not mention the 5 years mandatory requirement.
As against that, if the employee worked for 240 days between 01/01/2004 and 31/12/2004 and was on leave of various kinds for the remaining 125 days, he would have been eligible for gratuity on 31/12/2004, provided he was on the payroll on 31/12/2004.
This is my personal interpretation and opinion.
From India, Kolkata
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During this period of a minimum of 5 years of service, if in any calendar year of 12 months, the employee, for reasons given, has not completed 365 days of work but has completed 240 days (or as applicable), then it will be considered that the employee has completed continuous service for that year. So, if an employee joins on 01/01/2000, he completes 5 years on 31/12/2004, and becomes eligible on 31/12/2004, and not before that. During any of the years 2000, 2001, 2002, 2003, or 2004, if the employee did not work 365 days but worked 240 days, it will be considered as a full year. However, if the employee resigned on 31/08/2004, though he would have worked more than 240 days in 2004, it will not be considered as a full year in 2004, and so not 5 completed years. Thus, he would not be eligible for gratuity.
If the lawmakers intended that such a person should be eligible for gratuity after working for 4 years and 240 days, the law would have said so, and not mention the 5 years mandatory requirement.
As against that, if the employee worked for 240 days between 01/01/2004 and 31/12/2004 and was on leave of various kinds for the remaining 125 days, he would have been eligible for gratuity on 31/12/2004, provided he was on the payroll on 31/12/2004.
This is my personal interpretation and opinion.
From India, Kolkata
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"Sorry for pasting this portion:
Eligibility for Gratuity Based on Service Duration
"During this period of a minimum of 5 years of service, if in any calendar year of 12 months, the employee, for reasons given, has not completed 365 days of work but has completed 240 days (or as applicable), then it will be considered that the employee has completed continuous service for that year. So, if an employee joins on 01/01/2000, he completes 5 years on 31/12/2004. However, if the employee resigned on 31/08/2004, even though he would have worked more than 240 days in 2004, it will not be considered as a full year in 2004, and thus, not 5 completed years. Therefore, he would not be eligible for gratuity."
As per the Madras High Court order, in order to be eligible for gratuity, an employee should have at least 4.8 years of continuous service with the employer.
Service Criteria for Gratuity Eligibility
An employee is considered in service in a calendar year provided he has worked for:
- 190 days in case the employee is employed below the ground (4.6 years) - For mining staff {working below the ground}
- 240 days in any other case (above the ground - 4.8 years) - For office/field staff
Thank you.
From India, Mumbai
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Eligibility for Gratuity Based on Service Duration
"During this period of a minimum of 5 years of service, if in any calendar year of 12 months, the employee, for reasons given, has not completed 365 days of work but has completed 240 days (or as applicable), then it will be considered that the employee has completed continuous service for that year. So, if an employee joins on 01/01/2000, he completes 5 years on 31/12/2004. However, if the employee resigned on 31/08/2004, even though he would have worked more than 240 days in 2004, it will not be considered as a full year in 2004, and thus, not 5 completed years. Therefore, he would not be eligible for gratuity."
As per the Madras High Court order, in order to be eligible for gratuity, an employee should have at least 4.8 years of continuous service with the employer.
Service Criteria for Gratuity Eligibility
An employee is considered in service in a calendar year provided he has worked for:
- 190 days in case the employee is employed below the ground (4.6 years) - For mining staff {working below the ground}
- 240 days in any other case (above the ground - 4.8 years) - For office/field staff
Thank you.
From India, Mumbai
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Payment of Gratuity Act, 1972 & The Rules.ppt
THE PAYMENT OF GRATUITY ACT 1972.doc