Dear HR Professionals,
As we are all aware, every employee is eligible for payment of gratuity after completing 5 years of continuous service. Additionally, the employee should work for 240 days in each year to be eligible for gratuity for that year. My concern pertains to the calculation of these 240 days – specifically, which days should be considered as actual working days.
According to the Payment of Gratuity Act, 1972, the following days are to be treated as working days for the calculation of 240 days:
FORMULA I:
Actual working days as per attendance abstract.
Laid-off days under an agreement or as permitted by standing orders.
Days on leave with wages (Earned leave).
Absent days due to temporary disablement caused by an accident arising out of and in the course of employment.
In the case of a female, Maternity Leave days (Not exceeding twelve weeks).
FORMULA II:
Another procedure I have noticed in an organization involves the following calculation for 240 days of gratuity payment:
TOTAL WORKING DAYS (365 DAYS) - LOP DAYS - ABSENT DAYS = 240 DAYS.
I believe this practice is incorrect based on the gratuity act. Kindly advise on the correct procedure.
Furthermore, I am unsure whether sick leave and LOP (Authorized absence without wages) should be included as working days for the calculation of 240 days. Please clarify.
I would be thankful if you could provide the actual and correct procedure for calculating 240 days for payment of gratuity. Are there any Supreme Court or High Court judgments on this topic? If so, please provide me with the same.
Regards,
VASIREDDY VIJAYA CHANDRA
SENIOR EXECUTIVE - HR
From India, Hyderabad
Acknowledge(0)
Amend(0)
1As we are all aware, every employee is eligible for payment of gratuity after completing 5 years of continuous service. Additionally, the employee should work for 240 days in each year to be eligible for gratuity for that year. My concern pertains to the calculation of these 240 days – specifically, which days should be considered as actual working days.
According to the Payment of Gratuity Act, 1972, the following days are to be treated as working days for the calculation of 240 days:
FORMULA I:
Actual working days as per attendance abstract.
Laid-off days under an agreement or as permitted by standing orders.
Days on leave with wages (Earned leave).
Absent days due to temporary disablement caused by an accident arising out of and in the course of employment.
In the case of a female, Maternity Leave days (Not exceeding twelve weeks).
FORMULA II:
Another procedure I have noticed in an organization involves the following calculation for 240 days of gratuity payment:
TOTAL WORKING DAYS (365 DAYS) - LOP DAYS - ABSENT DAYS = 240 DAYS.
I believe this practice is incorrect based on the gratuity act. Kindly advise on the correct procedure.
Furthermore, I am unsure whether sick leave and LOP (Authorized absence without wages) should be included as working days for the calculation of 240 days. Please clarify.
I would be thankful if you could provide the actual and correct procedure for calculating 240 days for payment of gratuity. Are there any Supreme Court or High Court judgments on this topic? If so, please provide me with the same.
Regards,
VASIREDDY VIJAYA CHANDRA
SENIOR EXECUTIVE - HR
From India, Hyderabad
Acknowledge(0)Amend(0)
If a company is not covered by the Payment of Gratuity Act, then the employer may choose to provide gratuity at their own discretion. Gratuity is a type of gift from an employer to an employee. If there are more than 10 employees on any day during the preceding 12 months, the government enforces the Payment of Gratuity Act. In such cases, it becomes mandatory for the employer to pay gratuity, with the maximum limit set at 1,000,000. However, if the employer wishes to pay more, they have the option to do so.
From India, Kolkata
Acknowledge(0)Amend(0)
From India, Kolkata
Acknowledge(0)Amend(0)
I am a student of TILS, pursuing my final year BLM.
240 days gratuity calculation as we know, Total days in a year (365) - all Saturday and Sunday (104) - National and festival holidays (9) - CL or EL (12). So we get 365 - 125, which gives us 240. (Note: I have a doubt whether CL or EL is considered, please verify).
From India, Chennai
Acknowledge(0)Amend(0)
240 days gratuity calculation as we know, Total days in a year (365) - all Saturday and Sunday (104) - National and festival holidays (9) - CL or EL (12). So we get 365 - 125, which gives us 240. (Note: I have a doubt whether CL or EL is considered, please verify).
From India, Chennai
Acknowledge(0)Amend(0)Join Our Community and get connected with the right people who can help. Our AI-powered platform provides real-time fact-checking, peer-reviewed insights, and a vast historical knowledge base to support your search.
Minimum Qualifying service for Gratuity under the Payment of Gratuity Act.docx
Payment of Gratuity Act, 1972 & The Rules.ppt