I was with a cooperative bank on a 5-year contract, which was further extended for several one-year contracts, resulting in more than 8 years of continuous service. Those contracts stated that they included ex-gratia payment in the monthly salary. As gratuity is legally payable after 5 years of continuous service, am I entitled to gratuity at the end of employment, as ex-gratia and gratuity are not the same?
From India, Ahmedabad
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From India, Ahmedabad
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Dear Rajesh,
There is no mention of the total number of employees employed in the cooperative bank to determine the applicability of the Payment of Gratuity Act, 1972, to it. Assuming that the bank falls under the purview of the PGA, regardless of the mode of employment—whether permanent, temporary, casual, or contract basis, including fixed-term direct contract or through a third party—once an employee completes the minimum qualifying continuous service of 5 years, they become eligible to claim gratuity under the Act upon termination of employment due to resignation or expiry of the contract without any further extension.
Moving on to the question of the monthly payment of ex gratia, it cannot replace the statutory gratuity payable, as ex gratia is a separate payment made at the discretion of the employer, whereas gratuity is a statutory obligation payable only upon termination of employment, and that too in a lump sum. Therefore, the payment of ex gratia by the employer at their will to an employee while in service, irrespective of the reason for or mode of payment, cannot be a substitute for the payment of statutory gratuity upon termination of employment.
From India, Salem
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6108There is no mention of the total number of employees employed in the cooperative bank to determine the applicability of the Payment of Gratuity Act, 1972, to it. Assuming that the bank falls under the purview of the PGA, regardless of the mode of employment—whether permanent, temporary, casual, or contract basis, including fixed-term direct contract or through a third party—once an employee completes the minimum qualifying continuous service of 5 years, they become eligible to claim gratuity under the Act upon termination of employment due to resignation or expiry of the contract without any further extension.
Moving on to the question of the monthly payment of ex gratia, it cannot replace the statutory gratuity payable, as ex gratia is a separate payment made at the discretion of the employer, whereas gratuity is a statutory obligation payable only upon termination of employment, and that too in a lump sum. Therefore, the payment of ex gratia by the employer at their will to an employee while in service, irrespective of the reason for or mode of payment, cannot be a substitute for the payment of statutory gratuity upon termination of employment.
From India, Salem
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