Graduity Calculation

Can any one give me suggestion on my Doubt :
Gratuity is applicable if any employee completed 5 year of his/her cantinious job .
In situations how calculate the total number of years:-
1) If employee completed 5 Years and 4 Month and want to resign :-
2) If employee completed 5 Years and 6 Month and want to resign :-
3) If employee completed 5 Years and 7 Month and want to resign :-
How many Years taken in calculation of gratuity .

Dear Bhavya,
After five years,if workers work more than 6 months but less than a year,then it is calculated as another one year. But if they work less than 6 months after five years,then it will not be considered as another year.
So the gratuity will be calculated as below for your queries.
1. if 5 yrs and 4 months = 5 yrs only
2. if 5 yrs and 6 months (180 days) = 5 yrs only (If it is 181 days then you can calculate for 6 yrs)
3. if 5 yrs and 7 months = 6 yrs.

Dear Shenbagaraja
Thanks for advice. But would like to know the critaria of 180/181 days ? There is no mention about the days in the Act. It would be excess of six months only please clerify.
Regards
pkjain

Dear PK Jain,
Normally gratuity calculation is done for 26 days working in a month assuming 30 days in the month.
So 30*6 = 180 days.

Mr. Shebagarajan K
I don’t agree with you here. The provisions of sec. 4(2) are very clear on the issue.
The Sec. says that “For every completed year of service or part thereof in excess of six months, the employer shall pay gratuity to an employee ……..”
As such an employee who has service period of 5 years and 6 months would be entitling for 5 years gratuity only. Of course, if he/she has 6months+1 day or more then it would be 6 years.
Please don’t mix the 26 days / 30 days presumption criteria for calculation of length of service. Presumption criteria will not be acceptable while there is a clear cut provision in the Act itself.
Thanks
Pkjain

Dear PK Jain,
Revisit my answer to bhavya and reply whether you agree or not. i had clearly mentioned for 6 months and 1 day it will be calculated for whole year.(Normally we will go by 180 days for 6 months).
If you dont agree can you explain what is 6 month in days in gratuity.

Dear Shenbagaranjan K

Just I would like to explain you by giving an example.

Suppose Mr. X joined a company and his date of joining is 1.10.2006.

He resigned and relieved w.e f. 1.4.2012 (after working hours on 31.3.2012)

Now we have to count his length of service period and eligibility of Gratuity.

Length of service-- 2012-4-1

--2006-10-1

5 years 6 months 0 days

Five years service completed on 30.9.2011

Number of working days in last 6 months (from 1.10.2011 to 31.3.2012)

Oct’11 – 30 days

Nov’11- 30 days

Dec’11 – 31 days

Jan’12 – 31 days

Feb’12 – 29 days

March’12 – 31 days

Total days worked in last six months--- 182 days

As per your views expressed –“ if yrs and 6 months (180 days) = 5years only (if it is 181 days then you can calculate 6 yrs)

In the present set of example though Mr. X worked 182 days in last six months but he would not be entitled for gratuity. While as per your version he would be entitled as he worked more than 180 days.

I hope now I would be able to explain my point of view.

This is the legal position which upheld by in one of my company’s case by the court also, due to profession ethics , since it is not a reported case, I would not be able to share it otherwise I would like to share it on CiteHR.

Now it is up to you accept/ appreciate it or not. But certainly the feeling of your comment and Bhavya comment does not give a good test. I am putting it for the benefit of the other readers of this cite.

pkjain

Dear PK jain,
Normally 180 days is calculated for 6 months which every company calculates for probation period of employees.
And if you are so specific on day i agree with you.
But in your example the employee X is entitled for gratuity for 6 yrs because 1-Apr-2012 is a sunday. Even though the employee has relieved from the services on 31-03-2012 he is entitled for leave for working 6 day in the week . So on 1st also he is an employee of the organisation. so you have to count for 183 days i.e 5 yrs 6 months & 1 day. He cannot be denied for whole year gratuity.

Mr. SK
Thanks for your reply.
I shared the legal position which I have. it could be used if it is helpful to you or any reader of this site.
Otherwise there is no issue. The example set by me was for an explanation purpose only.
Thanks & Regards
Pkjain

Gratuity is calculated after completion of 5 years service.
As rightly said if an employee has completed 240 days in the last year then he is entitled for Gratuity. if he has not then he is not entitled for grautity.
Recently the High court has ruled that if an employee has completed 4 years and 8 months then he is entitled for gratuity.
Gratuity is calculated as follows : Basic+DA /26 x 15 x No of years of service.
Regards
Jay Kumtekar