Minimum Period For Gratuity

I have seen SC ruling on the minimum period to serve in a company is 4yrs and 240 days of service to get gratuity. The ruling says it should 240 days of continuous service in the 5th year. Now my questions
1. What does continuous service mean?
2. If i have few days of loss of pay leaves in my 5th year, how many days do i need to work in 5th year to get gratuity?
Please clarify my doubts
Thanks in advance
Cheers
Ram

Dear Ram,
You plz go through Section 2A of the Payment of Gratuity Act,1972 for your both the queries.
Regards,
R.N.Khola

(Labour Law & Legal Consultants)
09810405361

Santioned leave of any kind is included for purposes of reckoning 240 days.
Leave Without Pay, being sanctioned leave will be treated as part of 240 days for calculating eligibility for Gratuity.
Best Wishes,
Vasant Nair
09717726667

as per your que
1. 240 days cont. ser. means it is include Lop ( Authorised) as per act
so you are eligible as per

Dear Ram, As provided under the Payment of Gratuity Act, continous service includes all kinds of leave unless by an express order there is break in service. The requirement of 240 days service is needed for continuous service on any year. Unless the individual has actually worked in the company for 240 days in a year he is not entitled for gratuity. But 240 days service would include absence on account of sickness, accident, leave (even without leave), lay off strike or lock out or cessation of work not due to any fault of the employee.
Hope the above clarifies
KK Nair

Dear Ram,
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, including service which may be interrupted on account of sickness, accident, leave, lay-off, strike or a lock-out or cessation of work not due to any fault of the employee, whether such uninterrupted or interrupted service was rendered before or after the commencement of this Act;
In the Fifth year of service one must have drawn the salalry up to 240 days, then he shall be considered as continuous year of servcie. And gratuity shall be payable if one has rendered service for 240 days in fifth year.

Thanks
Arif Khan
9891578605

My personal view is that Section 2A "continuous service" and Section 4 "Payment of Gratuity" should be read separately. I feel that 240 days come into picture only after the initial completion of 5 years as per Section 4 where it specifically mentions that :

"Gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years".

While referring to the judgement of Madras High Court - Mettur Beardsell ltd, I found the following :

The fact of the case is as below:
1. Employees Joined Mettur Textiles (Private) Ltd., 23rd December 1977
2. Name of the company changed to Mettur Textiles - effective 1st Jan 1983, due to this reason he ceased to be an employee of Mettur Textiles Ltd effective 31.12.1983
Total Number of years of service here is 23-12-1977 to 31-12-1983 = 5 years and 8 days
3. As on 31.12.1983 - employee has resigned from services and relieved on the said date.
The main question here is that employee was getting salary less than 1000/- for a period of continuous 5 years for eligible for gratuity.

Other case in Supreme court was of Lalappa Lingappa Vs Vishnu Mills : In this case the employee had served the company for more than 12 years and had a break in service before the payment of gratuity.

I have not come across companies taking the stand of these above 2 cases and considering the payment of gratuity after completing 4 years and 240 days.

Also I have not seen any more cases coming up with the same kind of issues.

There is no amendment or change aswell in the Act as such.

To conclude, it is not very clear in the above 2 cases if the judgement was given considering that the employee had served more than 5 years but it was not continuous service. The judgement is not specific about if considering 4 years and 240 days as elegibility for payment of gratuity.

Please correct me if I am wrong. Even I need clarity on this issue.

Thanks

The condition of having worked and drawn pay for 240 days in the Vth year shall entitle an employee to claim gratuity only if his services were terminated by the employer and not by his leaving service on his own. This is in view of the fact that even otherwise an employee is entitled to claim gratuity if he has rendered continuous services of 5 years provided he has also drawn pay/worked for 240 days in each such year. The condition of 5 years has not been amended in the Act, but only its interpretation under the particular facts & circumstances of that case.
S.C. Verma

hi,
pls clarify my doubt,
1. do grauity caluclate for the resigned period
2. if staff resigned 1 or 2 months before completing 5yrs and work on notice period, so do we need to calculate for gratuity .
Regards
hema

hi,
I have completed 5 years in June 2013 and resigned from the company in november 2013, in between(in 2010) I took Leave without pay as I was sick . Now, they are saying that it being 150 days less in 5 years for gratuity, so I cannot claim gratuity amount. I want to know that a leave with pay in continous service reduces the gratuity tenure.
Thanks & Regards,
Ruchi