Dear Mohanasundaram,
In the case of death of an employee while in service, the completion of minimum qualifying service of 5 years continuous service is not required; but the nominee or legal heir of the deceased employee would get gratuity for the service rendered by the emplyee up to the date of his death only.
But certain progressive employers take up special insurance policy for gratuity with full life cover upto the age of retirement by paying additional premium in which case only gratuity would be payable till the date of retirement irrespective of the no of years of service rendered on the date of death while in service.