Gratuity Act 1972: Need Clarity
The Payment of Gratuity (Second Amendment) Act, 1984 clarifies this. One needs to calculate the number of years and service completion as follows:
Section 2A
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.
What happens when the establishment works 6 days a week on the 1st and 3rd week and 5 days a week on the 2nd and 4th week of the month?
Request expert opinion.
From India
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The Payment of Gratuity (Second Amendment) Act, 1984 clarifies this. One needs to calculate the number of years and service completion as follows:
Section 2A
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.
What happens when the establishment works 6 days a week on the 1st and 3rd week and 5 days a week on the 2nd and 4th week of the month?
Request expert opinion.
From India
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Dear Aakash, it is indeed a thought-provoking question. I believe one should aim to answer this question in a manner that aligns with the liberal and beneficial rule of interpretation for which section 2-A was introduced in the Payment of Gratuity Act, 1972, following the observations of the Supreme Court in the Lalappa & Lingappa judgment.
Definition of Continuous Service
The statutory definition of the term "continuous service" as defined under section 2 (c) of the Act for the purpose of gratuity payment is now contained in the subsequently introduced Section 2-A of the Act. Subsection (1) of Sec.2-A outlines the elements or components of continuous service under the Act. This includes certain interruptions that are considered as non-interruptions for calculating continuous service over a period. Notably, weekly-offs, weekly holidays, national holidays, and festival holidays, where employees do not work, are treated as days of duty only. The interruptions to continuous service could arise due to reasons such as sickness, accident, leave, unauthorized absence, lay-off, strike, or cessation of work not attributed to the employee. However, while this part of the definition describes the components of continuous service, it does not specify the duration within which permissible interruptions may occur. To determine both the overall period and the permissible interruptions, one must refer to the other subsections of section 2-A.
Quantifying Service Period and Interruptions
Subsections (2) and (3) quantify the overall service period within which such interruptions can occur and the minimum number of days, including such interruptions. Section 2-A(2) consists of clauses (a) and (b) for one year and six months, respectively. For the discussion at hand, let's focus solely on 2-A(2)(a).
Eligibility for Gratuity
Part (i) of clause (a) of ss (2) pertains to one year for employees working below ground in a mine or in establishments operating fewer than six days a week, setting the minimum number at 190 days in the previous 12 months. Part (ii) of cl (a) of ss (2) establishes the minimum at 240 days in other cases.
Consider an establishment that alternates between two five-day weeks and two six-day weeks monthly, totaling 286 days in a year and averaging about 5.5 days per week. In my view, employees of such an establishment would fall under Sec.2-A(2)(a)(i) and be eligible for gratuity upon completing 190 days of continuous service in a year.
Kind regards, [Your Name]
From India, Salem
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6108Definition of Continuous Service
The statutory definition of the term "continuous service" as defined under section 2 (c) of the Act for the purpose of gratuity payment is now contained in the subsequently introduced Section 2-A of the Act. Subsection (1) of Sec.2-A outlines the elements or components of continuous service under the Act. This includes certain interruptions that are considered as non-interruptions for calculating continuous service over a period. Notably, weekly-offs, weekly holidays, national holidays, and festival holidays, where employees do not work, are treated as days of duty only. The interruptions to continuous service could arise due to reasons such as sickness, accident, leave, unauthorized absence, lay-off, strike, or cessation of work not attributed to the employee. However, while this part of the definition describes the components of continuous service, it does not specify the duration within which permissible interruptions may occur. To determine both the overall period and the permissible interruptions, one must refer to the other subsections of section 2-A.
Quantifying Service Period and Interruptions
Subsections (2) and (3) quantify the overall service period within which such interruptions can occur and the minimum number of days, including such interruptions. Section 2-A(2) consists of clauses (a) and (b) for one year and six months, respectively. For the discussion at hand, let's focus solely on 2-A(2)(a).
Eligibility for Gratuity
Part (i) of clause (a) of ss (2) pertains to one year for employees working below ground in a mine or in establishments operating fewer than six days a week, setting the minimum number at 190 days in the previous 12 months. Part (ii) of cl (a) of ss (2) establishes the minimum at 240 days in other cases.
Consider an establishment that alternates between two five-day weeks and two six-day weeks monthly, totaling 286 days in a year and averaging about 5.5 days per week. In my view, employees of such an establishment would fall under Sec.2-A(2)(a)(i) and be eligible for gratuity upon completing 190 days of continuous service in a year.
Kind regards, [Your Name]
From India, Salem
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Payment of Gratuity Act, 1972 & The Rules.ppt
THE PAYMENT OF GRATUITY ACT 1972.doc