Re: Gratuity For An Employee - Pdf Download

Can anyone suggest if an employee who works for 4 years and eleven months is eligible for gratuity or not?

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Yeah, it's right that one should have at least 5 years of continuous service for eligibility for Gratuity. However, there are certain High Court orders stating that if an employee has completed 240 days of service in the 5th year, then they will be entitled to it.

Hello everyone. The act does say five years, but any period above six months is rounded off to one year. See section 4 of the act:

Section: 4 Payment of gratuity.
(1) 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.
(2) For every completed year of service or part thereof in excess of six months, the employer shall pay gratuity to an employee at the rate of fifteen days' wages based on the rate of wages last drawn by the employee concerned.

Regards,
Kirti

If the employee has worked for a continuous period of four years (240 days in each of these four years) and has also worked for 240 days in the last 11 months, he will be entitled to Gratuity.

Cheers!!!

Vasant Nair

No, he is not entitled. A minimum of 5 years is required. If he is serving a notice period after 4.11 years and completes 5 years, he is eligible for Gratuity.

Regards,
Mihir Vashi
Ma Foi Management Consultants Ltd.

Without completing continuous service of 5 years, he is not entitled to Gratuity. If anybody has any notifications, please attach them for information.

Thank you,
Thiru

Dear Bhuvnesh,

Any person who has completed 4 years and 6 months of service will be entitled to Gratuity. The number of years taken for calculation will be 5 years. If the tenure is less than 4 years and six months, it will be considered as 4 years, and that person will not be eligible for Gratuity.

Best Regards,
Shikha Agarwal

One is entitled to Gratuity only after the completion of 5 years, i.e., complete 5 years (60 months). I worked for an organization for 4 years and 10 months, and I did not receive the gratuity. The rounding off to 1 year, as mentioned by Kirti, is applicable only after completing 5 years. For instance, 5 years 6 months will be rounded off to 6 years, while 5 years 5 months or less will be rounded off to 5 years. I hope this is clear!

If you wish to receive Gratuity before completing 5 years, it is better to join TESCO as they claim to provide gratuity after 3 complete years :) However, this is not in accordance with the Indian Government Gratuity Act.

Hello,

I believe there is a misinterpretation of the section. Five years of continuous service are mandatory for any employee to receive the gratuity benefit. As mentioned in other comments, after completing five years, 240 days of work will be considered, starting from the sixth year onwards.

If an employee has worked for five years and 240 days, the gratuity would be calculated for six years. However, five years are mandatory unless the employee is PTD or deceased.

Regards,
Suresh

If an employee has worked for a continuous period of 5 years and 6 months, he is not only eligible for payment of Gratuity but also entitled to Gratuity calculated for 6 years. He does not need to work for 240 days in the sixth year to be entitled to 6 years' Gratuity.

Cheers!!!
Vasant Nair

I have reproduced the definition of continuous service below. It is self-explanatory.

It is clear that if an employee has worked for a continuous period of 240 days in a year, he would be deemed to have worked for one year.

Vasant Nair

Section: 2A

Continuous service.

For the purposes of this Act, -

(1) 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, 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 order, rules, or regulations governing the employees of the establishment), layoff, strike, or a lockout 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.

(2) where an employee (not being an employee employed in a seasonal establishment) is not in continuous service within the meaning of clause (1), for any period of one year or six months, he shall be deemed to be in continuous service under the employer -

(a) for the said period of one year, if the employee during the period of twelve calendar months preceding the date with reference to which calculation is to be made, has actually worked under the employer for not less than -

(i) one hundred and ninety days, in the case of an employee employed below the ground in a mine or in an establishment which works for less than six days in a week; and

(ii) two hundred and forty days, in any other case;

(b) for the said period of six months, if the employee during the period of six calendar months preceding the date with reference to which the calculation is to be made, has actually worked under the employer for not less than -

(i) ninety-five days, in the case of an employee employed below the ground in a mine or in an establishment which works for less than six days in a week; and

(ii) one hundred and twenty days, in any other case;

Yes, the Supreme Court has given judgment in one case that if you have completed 240 days in the fifth year, you are eligible for gratuity. However, the Gratuity Act does not state this nor is it amended. Therefore, five years of continuous service are required for gratuity. The only way the eligibility for gratuity can be changed is through an amendment in the Act.

Dear All,

Hello. I fully agree with Mr. Nair because according to the act, any person who has served 240 days in every year for continuous 5 years is eligible for GRATUITY. Now, the matter is the 5th year. I would like to inform you that in the 5th year, a person who has completed 6 months of service will not be considered as a complete year. After completing 5 years of service, if he/she leaves the job after 6 months in the 6th, 7th, or subsequent years, then that year will count as a complete year.

I would like to clarify that only if your employee has completed 240 days in the 5th year, then he would be eligible for Gratuity.

Regards,
Suman

The employer denied gratuity for not completing 5 years of continuous service. I had served 4 years and 11 months.

Make a representation and give it to the HR person, requesting them to reconsider your case for the payment of Gratuity. Maybe the New Year will bring in good luck! Cheers, Vasant Nair

Dear Suman,

A small correction: In the fifth year, the employee must have completed 240 days; only then would he be entitled to the payment of Gratuity. It is only after one qualifies for the five-year term that they are entitled to Gratuity, and the "six months or more" factor will be applied only for the purpose of calculating the payment of Gratuity.

For example, if an employee, as you have suggested, leaves after working for 4 years and seven months, they are not entitled to receive Gratuity. However, if an employee leaves the organization after completing 5 years of service, say, 7 months, then he/she will be entitled to receive Gratuity calculated for 6 years.

I trust you are clear about this now.

Cheers!!! Vasant Nair

Hi Kirti,

Six months is rounded up to one year, but he needs to serve 5 years of continuous service.

Hello,

Five years of service is mandatory to claim gratuity, but any period above six months is rounded off to one year. Please refer to Section 4 of the act.

Section 4 states the specific requirements.

If you need guidance, please reach out to seniors.

Thank you.
Regards,
Rajvir Singh
P.O.

Hello Mr. Suresh Deshpande,

Can you help me with how to implement different HR activities in a newly established company?

Hi Kirti,

After completing five years, only above six months are rounded off to one year.

Mano Kavin

Hi Kirti,

Only after completing five years, any period above six months is rounded off to one year.

Mano Kavin

He can avail gratuity even if he did not complete 5 years of service. The only requirement is that he should complete 240 days in the last year, i.e., the 5th year. Apart from this, if management decides to pay the gratuity even after 4 years, it is possible with the sanction of the trustee only. This amount is paid from the funds available with the provider or the fund manager. This is, of course, under normal conditions of employee departure.

No, he will not be eligible for gratuity. As per the act, the employee has to complete 5 years of service in the same organization.

Regards,
Charvaka Reddy

Minimum 5 years. However, rounding of 6 months to 1 year after completion of 4 years is debatable.

From Employer Interpretation:
If the 5-year rule is not met, they are not paying gratuity. They say the 240-day rule is applicable after 5 years, but that is not mentioned in the Act.

Employee Interpretation:
Since 240 days are covered in the 5th year as per clause 5 years of continuous service (Continuous service means a minimum of 240 days each year), he should be entitled. It seems many people have faced this issue. Can some authority be approached who is the owner of the Act to explain what is the exact interpretation? As of now, employers are enjoying the 5-year rule in their favor. Even for 4 years 11 months 29 days, they will not pay gratuity.

If an employee works for 4 years and 240 working days in the 5th year, they are eligible for gratuity. They do not need to work for the full term of 5 years. There are several court judgments on this matter.

Regards,
Ramana Reddy C.
Head of HR, Nitesh Group.

Any employee is eligible for gratuity after 5 years of continuous service, not before that. Round off to 1 year after 6 months is eligible only after 5 years of service. For example, you can count 6 years if the service period is 5 years and 7 months. However, you cannot count 5 years if the service period is 4 years and 11 months.

Naveen

Employers are not considering previous court judgments. The act has to clearly mention that; only then would they consider it.

Employees can't do anything. If they have the courage and patience, they can seek legal help. Otherwise, just forget about it.

I believe previous court judgments are not the exact same issue. In one case, an employee was fired before 5 years, so he could not receive gratuity. In that scenario, the court may have favored the employee.

Dear,

No.

With Regards,
R.N.Khola

Re: Gratuity for an Employee

He is eligible for gratuity. An employee is eligible for gratuity if he completes 4 years and 6 months of service. As per the gratuity act, if any employee completes 6 months, it is treated as one year.

Regards,
Krishna
email: krishna999@indiatimes.com

Dear Krishna,

This formula applies only in cases where an employee completes his five years of continuous service as per Section 2A of the Payment of Gratuity Act, 1972.

With Regards, R.N.Khola

Dear All,

As per the decision of the Honourable Supreme Court, if an employee has worked for 4 years and 6 months and is terminated by management, in that case, the employee is eligible for Gratuity.

Thanks,
Sachin Lahane

Hi,

No, he is not eligible for gratuity because an employee must work at least 5 years to be eligible for gratuity.

The Gratuity Act itself states that the employee who has worked for 4.5 years or more is eligible for gratuity, and it is considered as 5 years.

Regards,
VS

According to Sec. 4(1) under the Payment of Gratuity Act, 1972, 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:

(a) on his superannuation, or

(b) on his retirement or resignation, or

(c) on his death or disablement due to accident or disease:

Provided that the completion of continuous service of five years shall not be necessary where the termination of the employment of any employees is due to death or disablement.

Hi,

If the employee has worked for a continuous period of four years (240 days in each of these four years) and has also worked for 240 days in the last 11 months, he will be entitled to Gratuity. For withdrawal, it would be considered more than six months as a year, but for eligibility, he must serve for 240 days for the fifth year.

Regards,
C.M. Mohla

We had an employee who missed two days to complete his 5 years, and even after trying very hard, we could not get the gratuity amount for him. At least in Bangalore, gratuity is not paid if the employee has not completed five continuous years of service.

Hi,

Please check the below attached document.

Regards,
Murthy