I have a question in my mind about gratuity. If a worker joins my organization on the date of 1st January 2018 but unfortunately passes away on the date of 31st March 2018, will he be eligible for the gratuity amount?
From India, Ahmedabad
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8From India, Ahmedabad
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Not at all . He has to work one year/ 240 days continuous service, than in a death case he would be eligible for Gratuity
From India, Madras
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From India, Madras
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Gratuity is a statutory terminal benefit of employment available to an employee upon his superannuation, retirement, resignation, death, or disablement due to accident or disease, provided the employee has served for a minimum of 5 years continuously as per the provisions of Sec. 4 of the Payment of Gratuity Act, 1972.
However, in cases of death or disablement due to accident or disease, the first proviso to section (1) of Sec. 4 explicitly states that no minimum qualifying service is required. Therefore, gratuity must be calculated based on the actual service rendered by the employee on the date of his death or disablement, following the formula outlined in section 4(2) of the Act. The computation of gratuity is based on the number of completed years of service and the last drawn wages.
Eligibility for gratuity typically depends on the nature of termination of employment, while entitlement to gratuity is determined by the number of completed years of service. In the example provided, although the nature of termination (i.e., "death" while in service) makes the employee eligible for gratuity, his actual service duration of only 3 months (less than a year) in the establishment means he is not entitled to gratuity.
This is why both the Central and various State Rules of Gratuity require the submission of a nomination form for gratuity by an employee who completes one year of service in the same establishment. If the employer chooses to consider the 3-month service as equivalent to one year, they can calculate the gratuity accordingly and provide it to the deceased employee's family along with some ex-gratia payment.
From India, Salem
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However, in cases of death or disablement due to accident or disease, the first proviso to section (1) of Sec. 4 explicitly states that no minimum qualifying service is required. Therefore, gratuity must be calculated based on the actual service rendered by the employee on the date of his death or disablement, following the formula outlined in section 4(2) of the Act. The computation of gratuity is based on the number of completed years of service and the last drawn wages.
Eligibility for gratuity typically depends on the nature of termination of employment, while entitlement to gratuity is determined by the number of completed years of service. In the example provided, although the nature of termination (i.e., "death" while in service) makes the employee eligible for gratuity, his actual service duration of only 3 months (less than a year) in the establishment means he is not entitled to gratuity.
This is why both the Central and various State Rules of Gratuity require the submission of a nomination form for gratuity by an employee who completes one year of service in the same establishment. If the employer chooses to consider the 3-month service as equivalent to one year, they can calculate the gratuity accordingly and provide it to the deceased employee's family along with some ex-gratia payment.
From India, Salem
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There are several organizations (many PSUs like BHEL) that have a voluntary welfare facility of giving three months' salary in the event of death while in service before completion of five years of service as gratuity. This is entirely within the discretion of the employer to provide any such amount before completion of 240 days of service, as is the case here.
From India, Mumbai
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From India, Mumbai
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In continuation of the discussion on the trend indicated by Mr. KKHR, I have come to understand that LIC has introduced a special gratuity insurance policy with life cover until the insured employees' retirement date. This policy aims to ensure that full gratuity is paid on the predetermined normal retirement date, even in the unfortunate event of the insured employees passing away before their actual retirement date.
Individuals who have opted for this special gratuity insurance policy are encouraged to share the specifics for the benefit of others.
From India, Salem
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Individuals who have opted for this special gratuity insurance policy are encouraged to share the specifics for the benefit of others.
From India, Salem
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Dear Learned Members,
All discussion on Gratuity revolves around the issue of whether an employee has served 5 years or not with the employer. In the current scenario, it is very common for an employee to switch jobs before the 5-year period. Over a career of 20 or more years, many employees may have switched jobs numerous times, thus denying them the benefit of gratuity with each individual employer. The employee ends up with no gratuity benefit even after working for so many years.
Is there any mechanism whereby this accrued benefit can be transferred to the next employer so that at the end of an employee's working life, they receive some benefit from a long career? Just thinking aloud!
From India, Kochi
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All discussion on Gratuity revolves around the issue of whether an employee has served 5 years or not with the employer. In the current scenario, it is very common for an employee to switch jobs before the 5-year period. Over a career of 20 or more years, many employees may have switched jobs numerous times, thus denying them the benefit of gratuity with each individual employer. The employee ends up with no gratuity benefit even after working for so many years.
Is there any mechanism whereby this accrued benefit can be transferred to the next employer so that at the end of an employee's working life, they receive some benefit from a long career? Just thinking aloud!
From India, Kochi
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I would like to comment on Mr. Umakantan's observation. You are correct regarding the LIC coverage. If the company has taken LIC coverage for their gratuity fund, then the deceased employee's nominee in question would have received his gratuity amount till his actual date of retirement, irrespective of the number of years he has served in the organization.
From India, Mumbai
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From India, Mumbai
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Further to the posts of Mr. Umakanthan and Mr. Shashikumar Nair, I would like to add that my organization is presently in the process of renewal of LIC Group Gratuity Cash Accumulation Plan. In the renewal notice, LIC has intimated that the default quote will be generated based on:
a) Upward revision of Gratuity from 10L to 20L.
b) Life Cover of Rs. 20L.
The company has the following options for renewal:
a) Reduce gratuity ceiling for LIC Policy below 20L with an undertaking that any shortfall in gratuity benefit will be fulfilled by the company.
b) Limit the Life cover to any desired amount less than 20L (again with a signed letter by the company).
From the post of Mr. Shashikumar Nair, I understand that the life cover is basically to ensure gratuity payout to the beneficiaries in case of the death of the employee, even if he is not eligible for gratuity (less than 5 years of service). Am I right?
What will be the payout from LIC GGCA Plan in case the employee dies after serving more than 5 years (eligible for gratuity)? Will his nominee get the gratuity due to him as of the date of his death PLUS the life insurance cover? Or will it be ONLY the gratuity amount due to him as if he had retired on the due date?
I have asked these clarifications from LIC but am yet to get a reply. I shall update this post as and when I get a reply. However, members may please advise based on their own experience.
Thanks
From India, Kochi
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a) Upward revision of Gratuity from 10L to 20L.
b) Life Cover of Rs. 20L.
The company has the following options for renewal:
a) Reduce gratuity ceiling for LIC Policy below 20L with an undertaking that any shortfall in gratuity benefit will be fulfilled by the company.
b) Limit the Life cover to any desired amount less than 20L (again with a signed letter by the company).
From the post of Mr. Shashikumar Nair, I understand that the life cover is basically to ensure gratuity payout to the beneficiaries in case of the death of the employee, even if he is not eligible for gratuity (less than 5 years of service). Am I right?
What will be the payout from LIC GGCA Plan in case the employee dies after serving more than 5 years (eligible for gratuity)? Will his nominee get the gratuity due to him as of the date of his death PLUS the life insurance cover? Or will it be ONLY the gratuity amount due to him as if he had retired on the due date?
I have asked these clarifications from LIC but am yet to get a reply. I shall update this post as and when I get a reply. However, members may please advise based on their own experience.
Thanks
From India, Kochi
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Hi All, Is Gratuity is applicable for Directors also? N. Devashree
From India, Pune
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From India, Pune
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Payment of Gratuity Act, 1972 & The Rules.ppt
FORM - F (TN Payment of Gratuity Rules, 1973).xls
Abstract of PAYMENT OF GRATUITY ACT & RULES, 1972, FORM U[1].doc