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

Dear Members,

I wish to clarify about eligibility to receive the gratuity when I leave my job at my current company. My service details are as below:

a) Date of Joining: - September 3, 2019
b) The last working day will be on: - July 31, 2024
c) The expected length of the stay: - 4 years, 10 months and 28 days
d) Whether there was a break in service: - No
e) The nature of the industry: Manufacturing & Assembly
f) Place of work: - Anantapur, Andhra Pradesh

Am I eligible to receive the gratuity? If yes, then how should I submit Form 1 to my company? Does the payment of gratuity differ for the manufacturing and the service industry? On this forum, I read that the Supreme Court has ruled that if an employee completes four years and two hundred forty days, he or she becomes eligible to receive the gratuity. Can anyone please provide the exact link to the Supreme Court ruling?


Regards,
Harish
9912032939

Eligibility to get gratuity is given in section 4(1) of the Payment of Gratuity Act. This section says that an employee should require minimum five years of continuous service. Section 2A says that "an employee shall be said to be in continuous service if he, 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 two hundred and forty days. If the establishment is working for less than 6 days in a week or with regard to an employee working below the ground of a mine 190 days would be sufficient. This is a requirement is to ensure whether an employee has continuous service or not and not for eligibility for gratuity. In order to be eligible for gratuity one should have minimum five years service and each year should have 240/ 190 days working.

In your case since you had no loss of pay days in your past years, each year would be qualify to be continuous service. But you have not qualified to become eligible for gratuity as per section 4(1) because you have not worked for 5 years.

Madras High Court in Mettur Beardsels case and Kerala High Court in Sreeja's case have interpreted that 240 days' working in the fifth year would qualify for gratuity. These courts have considered that 240 days in a year means a year's service, and hence even if an employee has not worked for five years, he will be eligible to get gratuity if he had worked for 240/ 190 days in each year. If you take the dictum of these verdicts, you can also try to get gratuity. For that you may have to move legally.

Please note that there is no Supreme Court verdict which supports 240 days working in the fifth year would qualify for gratuity. If available, then that would have been made applicable to all the states. It is interesting that the proposed labour codes also did not touch this issue which has been a dispute for very long periods.

Dear Mr Madhu TK, Thanks for the elaborate reply. Regards, Dinesh Divekar

Well explained by Madhu

Please note that there is no amendment in the Bare Acts & these high court rulings might not be applicable to other states other than TN & Kerala

in few organisations apart from TN & Kerala are following 4 years 280/190 days

Dear Team,

After several discussion finally my company has concluded that not eligible for gratuity. since it is not completed for 5years.

company will be provided that if any government rule is there for 4years 240days