Eligible to receive the gratuity for 4years, 10 months and 28 days

Dear Members,

I wish to clarify the eligibility criteria for receiving gratuity upon leaving my current job at the company. Below are the details of my service:

a) Date of Joining: September 3, 2019
b) Last working day: July 31, 2024
c) Expected tenure: 4 years, 10 months, and 28 days
d) Break in service: No
e) Industry: Manufacturing & Assembly
f) Location: Anantapur, Andhra Pradesh

Am I eligible for gratuity upon leaving? If so, how should I submit Form 1 to the company? Does the gratuity payment differ between manufacturing and service industries? I came across a forum mentioning that the Supreme Court ruled employees completing four years and 240 days are eligible for gratuity. Can someone provide the exact link to this ruling?

Regards, Harish 9912032939

Eligibility to get gratuity is given in section 4(1) of the Payment of Gratuity Act. This section states that an employee should have a minimum of five years of continuous service. Section 2A states that "an employee shall be said to be in continuous service if, during the period of twelve calendar months preceding the date with reference to which the calculation is to be made, he has actually worked under the employer for not less than two hundred and forty days. If the establishment operates for less than six days a week or concerning an employee working below the ground of a mine, 190 days would be sufficient. This requirement aims to determine whether an employee has continuous service, not for gratuity eligibility. To qualify for gratuity, one must have a minimum of five years of service, with each year comprising 240/190 days of work.

In your case, since you have had no loss of pay days in your previous years, each year would qualify as continuous service. However, you do not meet the eligibility for gratuity as per section 4(1) because you have not worked for five years.

The Madras High Court in the Mettur Beardsels case and the Kerala High Court in Sreeja's case have interpreted that 240 days of working in the fifth year would qualify for gratuity. These courts have considered that 240 days in a year constitute a year's service. Therefore, even if an employee has not worked for five years, they will be eligible for gratuity if they had worked for 240/190 days in each year. By following the precedent set by these verdicts, you may attempt to claim gratuity, possibly requiring legal action.

It is important to note that there is no Supreme Court verdict supporting the notion that 240 days of work in the fifth year would qualify for gratuity. If such a ruling existed, it would be applicable nationwide. Interestingly, the proposed labor codes have not addressed this long-standing dispute.

Dear Mr. Madhu TK,

Thank you for the elaborate reply.

Regards,
Dinesh Divekar

Well explained by Madhu.

Please note that there are no amendments in the Bare Acts, and these high court rulings might not be applicable to states other than TN and Kerala.

In some organizations outside of TN and Kerala, a four-year tenure of 280/190 days is being followed.

Dear Team,

After several discussions, my company has finally concluded that I am not eligible for gratuity since I have not completed 5 years of service.

The company will provide gratuity if there is a government rule specifying eligibility with 4 years and 240 days of service.

Thank you.