I worked in a company from 12/02/2008 till 07/10/2013. Am I eligible for gratuity?
I rejoined the same company on 12/16/2013 and went on maternity leave on 04/04/2019. Since I had adopted a child less than 3 months old, I was entitled to only 12 weeks of ML (till 07/04/2020). However, my employer accommodated me and allowed me to extend my ML until my baby was a year old. I was supposed to return to work in April 2020. Due to the Covid-19 situation, they requested me to wait until everything settled before returning (all communication was verbal and through text messages, no emails). In August, my HR contacted me and suggested that I resign since there was not much work, and I agreed since I wanted to dedicate more time to my child.
I know I am eligible for gratuity. But until what date?
Please help. Thank you for your time and patience.
Regards, Anu
From India, Bengaluru
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I rejoined the same company on 12/16/2013 and went on maternity leave on 04/04/2019. Since I had adopted a child less than 3 months old, I was entitled to only 12 weeks of ML (till 07/04/2020). However, my employer accommodated me and allowed me to extend my ML until my baby was a year old. I was supposed to return to work in April 2020. Due to the Covid-19 situation, they requested me to wait until everything settled before returning (all communication was verbal and through text messages, no emails). In August, my HR contacted me and suggested that I resign since there was not much work, and I agreed since I wanted to dedicate more time to my child.
I know I am eligible for gratuity. But until what date?
Please help. Thank you for your time and patience.
Regards, Anu
From India, Bengaluru
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Eligibility for Gratuity
Regarding gratuity for the first spell, i.e., from 2.12.2008 to 10.7.2013, if you have continuous service of 4 years plus 240 days during the 5th year, you are eligible to receive gratuity under the Gratuity Act. This does not consider your second spell.
It's not clear whether you left the same company on 10.7.2013, resigned, or otherwise. Subject to confirmation of this fact, it's presumed there is a gap in service between 10.7.2013 and 16.12.2013 (Date of Rejoining), i.e., about 5 months. Hence, your service has been interrupted. If yes, this second spell cannot be combined with the first spell of 4 years plus more than 240 days.
Maternity Leave and Gratuity Eligibility
Having availed maternity leave from 4.4.2019 to 4.7.2020, and even if treated as continued till date (since there is no mention of effective rejoining after maternity leave), the required service of 5 years and above can be considered as eligible for the second spell, i.e., from 16.12.2013 to 4.7.2020 as well. It's necessary to determine the effective date of separation for the second spell before ascertainment.
Consideration Under New Labour Codes
However, if there is a possibility to consider your case under the new Labour Codes, which are still to be implemented, the perception is likely to change.
From India, Bangalore
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1159Regarding gratuity for the first spell, i.e., from 2.12.2008 to 10.7.2013, if you have continuous service of 4 years plus 240 days during the 5th year, you are eligible to receive gratuity under the Gratuity Act. This does not consider your second spell.
It's not clear whether you left the same company on 10.7.2013, resigned, or otherwise. Subject to confirmation of this fact, it's presumed there is a gap in service between 10.7.2013 and 16.12.2013 (Date of Rejoining), i.e., about 5 months. Hence, your service has been interrupted. If yes, this second spell cannot be combined with the first spell of 4 years plus more than 240 days.
Maternity Leave and Gratuity Eligibility
Having availed maternity leave from 4.4.2019 to 4.7.2020, and even if treated as continued till date (since there is no mention of effective rejoining after maternity leave), the required service of 5 years and above can be considered as eligible for the second spell, i.e., from 16.12.2013 to 4.7.2020 as well. It's necessary to determine the effective date of separation for the second spell before ascertainment.
Consideration Under New Labour Codes
However, if there is a possibility to consider your case under the new Labour Codes, which are still to be implemented, the perception is likely to change.
From India, Bangalore
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On 10/07/2013, I was relieved. It’s 222 days in the 5th year, so I assume I’m not eligible. On 16/12/2013, I rejoined, considered as a new employment. Now, after I went on maternity leave (ML), I didn’t resume duty. My 12 weeks of ML exhausted in July, but with permission from my boss, I extended it till April 2020 via phone and email. However, in April 2020, due to the COVID-19 situation, they asked me not to join and to wait it out. In August, they asked me to resign, and I sent an email. They officially relieved me on 25/08/2020.
From India, Bengaluru
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From India, Bengaluru
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Yes, for the 2nd spell, 6 years + >6 months = 7 years, gratuity is payable to you.
New Labour Codes
Please read the attached materials on the New Labour Codes awaiting notification of the effective date after completing other formalities. These 4 Labour Codes comprise many rationalizations of various provisions and will replace and subsume many labour-related Acts/laws currently in effect. There are provisions that ultimately favor labor reforms, while on the other hand, some provisions are not as pro-labor. You can find a summary in the attachment. For detailed reading, you can log in to the website of the Labour Dept. GoI, where gazetted notifications can be downloaded.
From India, Bangalore
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New Labour Codes
Please read the attached materials on the New Labour Codes awaiting notification of the effective date after completing other formalities. These 4 Labour Codes comprise many rationalizations of various provisions and will replace and subsume many labour-related Acts/laws currently in effect. There are provisions that ultimately favor labor reforms, while on the other hand, some provisions are not as pro-labor. You can find a summary in the attachment. For detailed reading, you can log in to the website of the Labour Dept. GoI, where gazetted notifications can be downloaded.
From India, Bangalore
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Thanks for all the material. I'll definitely go through them. I have a quick question though...
Gratuity Eligibility During Extended Maternity Leave
For the second spell, I was told by my HR that I'm entitled to gratuity only until 04/07/2019. Since I was on extended maternity leave, the period from July 2019 until August 2020 isn't considered. Is that correct?
From India, Bengaluru
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Gratuity Eligibility During Extended Maternity Leave
For the second spell, I was told by my HR that I'm entitled to gratuity only until 04/07/2019. Since I was on extended maternity leave, the period from July 2019 until August 2020 isn't considered. Is that correct?
From India, Bengaluru
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Service Particulars Analysis
For the first spell, you missed the gratuity by about 18 days.
Second Spell Details
Served from 16.12.2013 to 3.4.2019. Maternity Leave (ML) from 4.4.2019 to 16.6.2019 (4.7.2020) with 12 weeks of entitlement up to only 16.6.2019 (extended from 17.6.19 to 4.7.20; 24.3.20 to April 20 due to the Covid pandemic lockdown, but it is not stated whether the salary was paid or not).
Extended Leave and Absence
On extended leave (Leave Without Pay - LWP) from 17.6.2019 to 4.7.2020 (not reported/not worked). Unclassified absence/leave from 5.7.20 to 25.8.2020. Relieved on 25.8.2020.
Gratuity Eligibility Clarification
It's understood that your office granted leave up to 4.7.20, which means the period from 4.7.20 till your relieving date, 25.8.20, has been treated as 'leave of absence,' not entitled to salary or unpaid leave. In effect, your service has been closed on 3.7.20 itself, which is why gratuity has been considered up to 4.7.20 only. You have not indicated whether you received the salary from 4.4.2019 onwards, said to be on permitted leave. Having completed a full 5 years, you are eligible, but to become eligible for the 6th year of service, you are short of the stipulated 6 months.
Can you check whether your relieving letter is dated 25.8.20 or stated as 'relieved on 25.8.20'? In any case, it appears your service has been discontinued on 4.7.20.
From India, Bangalore
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For the first spell, you missed the gratuity by about 18 days.
Second Spell Details
Served from 16.12.2013 to 3.4.2019. Maternity Leave (ML) from 4.4.2019 to 16.6.2019 (4.7.2020) with 12 weeks of entitlement up to only 16.6.2019 (extended from 17.6.19 to 4.7.20; 24.3.20 to April 20 due to the Covid pandemic lockdown, but it is not stated whether the salary was paid or not).
Extended Leave and Absence
On extended leave (Leave Without Pay - LWP) from 17.6.2019 to 4.7.2020 (not reported/not worked). Unclassified absence/leave from 5.7.20 to 25.8.2020. Relieved on 25.8.2020.
Gratuity Eligibility Clarification
It's understood that your office granted leave up to 4.7.20, which means the period from 4.7.20 till your relieving date, 25.8.20, has been treated as 'leave of absence,' not entitled to salary or unpaid leave. In effect, your service has been closed on 3.7.20 itself, which is why gratuity has been considered up to 4.7.20 only. You have not indicated whether you received the salary from 4.4.2019 onwards, said to be on permitted leave. Having completed a full 5 years, you are eligible, but to become eligible for the 6th year of service, you are short of the stipulated 6 months.
Can you check whether your relieving letter is dated 25.8.20 or stated as 'relieved on 25.8.20'? In any case, it appears your service has been discontinued on 4.7.20.
From India, Bangalore
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Gratuity Calculation Query
The company paid me only until my entitled maternity leave. From 04/07/2019 until the date I was relieved, I haven't received any salary as it was leave without pay (LWP). My HR said my gratuity will be calculated only until 04/07/2019, not until 2020. Please clarify if I am entitled to gratuity until 2020 or only until 04/07/2019?
Thanks again for the help.
From India, Bengaluru
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The company paid me only until my entitled maternity leave. From 04/07/2019 until the date I was relieved, I haven't received any salary as it was leave without pay (LWP). My HR said my gratuity will be calculated only until 04/07/2019, not until 2020. Please clarify if I am entitled to gratuity until 2020 or only until 04/07/2019?
Thanks again for the help.
From India, Bengaluru
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Eligibility for Gratuity
The company has relieved you only on 25.08.2020. That means your continuous service is until that date, although you have been paid only until 04.07.2019. The definition of continuous service includes a period of absence as long as it is uninterrupted service. So you are entitled to gratuity until 25.08.2020. Accordingly, you are entitled to seven years of gratuity.
From India, Mumbai
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The company has relieved you only on 25.08.2020. That means your continuous service is until that date, although you have been paid only until 04.07.2019. The definition of continuous service includes a period of absence as long as it is uninterrupted service. So you are entitled to gratuity until 25.08.2020. Accordingly, you are entitled to seven years of gratuity.
From India, Mumbai
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Thank you for clarifying that for me! Now, if I may, please ask for some more help here. May I ask you to help me with the information on which codes or rules to mention specifically to support my stand about the 7 years gratuity? Thanks again for all your time and help; I appreciate it.
From India, Bengaluru
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From India, Bengaluru
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No gratuity payment for initial years of service: New Labour Law Code Rules
New Labour Law Code – The Code on Social Security, 2019, the effective date is yet to be notified by the government, though this Code itself has been notified after formal approval by the President of India on 28.9.20. It's speculated that it may happen in Dec. 20.
It was agreed on part of easing compliance for business, to subsume the nine major labor laws which include as follows:
1. The Employee Provident Fund Act, 1952;
2. Social Security Act, 2008;
3. Maternity Benefit Act, 1961;
4. Employee State Insurance Act, 1948;
5. Employee Compensation Act, 1923;
6. Cine Workers Welfare Fund Act, 1981;
7. Unorganized Workers Social Security Act, 2008;
8. Building and Other Construction Workers Cess Act, 1996; and
9. The Payment of Gratuity Act, 1972 under a single labor Code.
Within the new Labour Law Code, with the help of concerned stakeholders and authorities, the government has notified a provision for the reduction of the eligibility criteria for payment of gratuity and related rules which were being followed for decades.
The Code under its Chapter V – Rules for Gratuity now prescribes a reduction in tenure for the payment of gratuity to employees in some exceptional circumstances even if they have not completed their five years of service with the organization.
Present Rules for Payment of Gratuity
The Payment of Gratuity Act 1972 states for "the payment of gratuity to the employee – on termination of his employment service when the employee has rendered his service to the organization continuously for not less than 5 years and claims for gratuity in superannuation, death, or disablement or on his retirement or resignation."
Provided further that "completion of a term of 5 years will not be necessary for claims made in case of death or disablement of the employee."
That's to say, the said rules state that other than in the situation of death or disablement, employees would not be able to claim gratuity before the completion of their five years of service.
New Guidelines under Proposed Code of Social Security for Payment of Gratuity
The Code on Social Security, 2019 under its Chapter V–Gratuity states for "the payment of gratuity to the employee on termination of his employment service when the employee has rendered his service to the organization for not less than 5 years and claims for gratuity can be done: On his superannuation, On his retirement or resignation or On his death or disablement due to some accident or disease or On termination of his contract period under fixed-term employment or; On the happening of any such event as may be notified by the Central Government."
Provided that completion of the said period of service shall not be required in case of termination of employment of the employee due to death or disablement or expiration of fixed employment or on the happening of any such event as may be notified by the Central Government.
In other words, the above rules state no condition for completion of a 5-year service period has been placed for the employees for claiming their gratuity amount on death and disablement and on termination of the contract period and on any specific event as may be notified by the Central Government timely.
The Calculation for Payment of Gratuity
The proposed Code on Social Security, 2019 shall be equally applicable like all other labor laws and codes on all employees including the white-collar and industry employees.
As per the Code, the calculation of the gratuity amount shall be done in a similar manner as it was indicated in the past law. Gratuity will be paid at the rate of 15 days' wages for every completed year of service or part thereof in excess of six months or for such a number of days as may be notified by the Central government based on the rate of wages last drawn by the employee concerned.
For employees receiving monthly wages or salaries, 15-day wages will be calculated using the following formula: "15 days wages: Last salary drawn/26 x15."
Note: The Code rules prescribed for gratuity shall not be applicable to Central or State government employees or on employees governed by any other act which prescribes different rules for payment of gratuity.
We have to await the notification for "from when the Labour Codes" would come into effect.
From India, Bangalore
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New Labour Law Code – The Code on Social Security, 2019, the effective date is yet to be notified by the government, though this Code itself has been notified after formal approval by the President of India on 28.9.20. It's speculated that it may happen in Dec. 20.
It was agreed on part of easing compliance for business, to subsume the nine major labor laws which include as follows:
1. The Employee Provident Fund Act, 1952;
2. Social Security Act, 2008;
3. Maternity Benefit Act, 1961;
4. Employee State Insurance Act, 1948;
5. Employee Compensation Act, 1923;
6. Cine Workers Welfare Fund Act, 1981;
7. Unorganized Workers Social Security Act, 2008;
8. Building and Other Construction Workers Cess Act, 1996; and
9. The Payment of Gratuity Act, 1972 under a single labor Code.
Within the new Labour Law Code, with the help of concerned stakeholders and authorities, the government has notified a provision for the reduction of the eligibility criteria for payment of gratuity and related rules which were being followed for decades.
The Code under its Chapter V – Rules for Gratuity now prescribes a reduction in tenure for the payment of gratuity to employees in some exceptional circumstances even if they have not completed their five years of service with the organization.
Present Rules for Payment of Gratuity
The Payment of Gratuity Act 1972 states for "the payment of gratuity to the employee – on termination of his employment service when the employee has rendered his service to the organization continuously for not less than 5 years and claims for gratuity in superannuation, death, or disablement or on his retirement or resignation."
Provided further that "completion of a term of 5 years will not be necessary for claims made in case of death or disablement of the employee."
That's to say, the said rules state that other than in the situation of death or disablement, employees would not be able to claim gratuity before the completion of their five years of service.
New Guidelines under Proposed Code of Social Security for Payment of Gratuity
The Code on Social Security, 2019 under its Chapter V–Gratuity states for "the payment of gratuity to the employee on termination of his employment service when the employee has rendered his service to the organization for not less than 5 years and claims for gratuity can be done: On his superannuation, On his retirement or resignation or On his death or disablement due to some accident or disease or On termination of his contract period under fixed-term employment or; On the happening of any such event as may be notified by the Central Government."
Provided that completion of the said period of service shall not be required in case of termination of employment of the employee due to death or disablement or expiration of fixed employment or on the happening of any such event as may be notified by the Central Government.
In other words, the above rules state no condition for completion of a 5-year service period has been placed for the employees for claiming their gratuity amount on death and disablement and on termination of the contract period and on any specific event as may be notified by the Central Government timely.
The Calculation for Payment of Gratuity
The proposed Code on Social Security, 2019 shall be equally applicable like all other labor laws and codes on all employees including the white-collar and industry employees.
As per the Code, the calculation of the gratuity amount shall be done in a similar manner as it was indicated in the past law. Gratuity will be paid at the rate of 15 days' wages for every completed year of service or part thereof in excess of six months or for such a number of days as may be notified by the Central government based on the rate of wages last drawn by the employee concerned.
For employees receiving monthly wages or salaries, 15-day wages will be calculated using the following formula: "15 days wages: Last salary drawn/26 x15."
Note: The Code rules prescribed for gratuity shall not be applicable to Central or State government employees or on employees governed by any other act which prescribes different rules for payment of gratuity.
We have to await the notification for "from when the Labour Codes" would come into effect.
From India, Bangalore
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Okay, now, since the effective date hasn't been announced yet, if my employer settles my gratuity, will I be paid for 6 years? And at a later date, when the effective date is declared, will they have to reprocess and pay the difference?
From India, Bengaluru
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From India, Bengaluru
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Gratuity Entitlement for Ms. Anuradha
Ms. Anuradha would be entitled to gratuity for her service up to the date of her resignation, irrespective of the leave being LOP or otherwise, as stated by Mr. K.K.H!R.
Prospective Effect of the Code on Social Security
The Code on Social Security will have only a prospective effect from its date of notification, and I hope it would not be given retrospective effect as it would give rise to thousands of claims already settled.
From India, Salem
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Ms. Anuradha would be entitled to gratuity for her service up to the date of her resignation, irrespective of the leave being LOP or otherwise, as stated by Mr. K.K.H!R.
Prospective Effect of the Code on Social Security
The Code on Social Security will have only a prospective effect from its date of notification, and I hope it would not be given retrospective effect as it would give rise to thousands of claims already settled.
From India, Salem
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Continuous Service and Gratuity Eligibility
You can refer to Section 2(A)(1) of the Payment of Gratuity Act 1972, quoted below:
2A. Continuous service - For the purposes of this Act, an employee shall be said to be in continuous service for a period if he has, for that period, been in uninterrupted service. This includes service which may be interrupted due to sickness, accident, leave, absence from duty without leave (not being absence in respect of which an order treating the absence as a break in service has been passed in accordance with the standing orders, rules, or regulations governing the employees of the establishment), lay-off, strike, or a lock-out or cessation of work not due to any fault of the employee. This applies to both uninterrupted and interrupted service, whether rendered before or after the commencement of this Act.
Since you have had uninterrupted service from 16.12.2013 to 25.08.2020, you are eligible to receive gratuity for the whole period of seven years.
From India, Mumbai
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You can refer to Section 2(A)(1) of the Payment of Gratuity Act 1972, quoted below:
2A. Continuous service - For the purposes of this Act, an employee shall be said to be in continuous service for a period if he has, for that period, been in uninterrupted service. This includes service which may be interrupted due to sickness, accident, leave, absence from duty without leave (not being absence in respect of which an order treating the absence as a break in service has been passed in accordance with the standing orders, rules, or regulations governing the employees of the establishment), lay-off, strike, or a lock-out or cessation of work not due to any fault of the employee. This applies to both uninterrupted and interrupted service, whether rendered before or after the commencement of this Act.
Since you have had uninterrupted service from 16.12.2013 to 25.08.2020, you are eligible to receive gratuity for the whole period of seven years.
From India, Mumbai
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Maternity Leave Policy - posting.doc
Temporary, adhoc & contract worker also eligible for maternity leave 12102017.pdf