Gratuity eligibility

As per section 4 of The  payment of Gratuity Act, 1972, only those employees are entitled to gratuity who have completed continous service of 5 years.The word not less than 5 years has been used in the section and section 4 is a mandatory provision.The only exception to the continous service of 5 years is that where termination of the employment is due to death or disablement.In my opinion, rendering of continous and un-interupted service of five years is mandtory in order to claim the gratuity by any employee upon termination of his services.Perhaps, there is no judgment whereby less service than 5 years has been held valid for claiming the gratuity.

Thanks Mr. Sanjay for your reply.

But here in Sec. 4 the wording of continuous service is defined in Sec. 2A where it says if an employee is in continuous service for 240(6 days a week) is deemed to be a completed year of service. Accordingly, where an employee is in continuous service for 4 years and 240 days  in 5th year of his service, he/she is deemed to be completed 5 year of continuous service and eligible for gratuity as it is 'not less than 5 year' ( in other words 5 and above years). The above view is taken in Mettur Beardsell Ltd., Madras Vs. RLC(C) 1998 LLR 1072(Mad).

Now my question is that any High Court decision is applicable to only that state? why the Madras High Court decision could not be considered as the base for gratuity eligibility in Karnataka also OR is it only considered for interpretation of statute in other states?

Anticipating your valuable reply.

Regards

N B Nesur

I agree with Shri Nagappa B Nesur.The Act requires 5 years contineous service to qualify to receive gratuity.Contineous service is uninterrupted service.If service is interrupted for any reason say,termination,resignation etc, then if an employee has worked for more than 240 days in that year (180 in seasonal industry),he shall be deemed to be in contineous service for that year.Thus qualify for gratuity.

It is not correct to state thar decision of Hon. High court of the state is required to be accepted in that state only.Only if contrary decision  exists,then the courts subordinate to that high court should follow decision of their High Court.Of course if decision of Appex court exists,then only that shall be followed.

Thank your Mr. Jagadish and I agree with you regarding applicability of High Court decisions.

I want to know the above matter in more clear way that : (a) If Uninterrupted service then 5 years i.e 5*365, (b) If Interrupted service then 4 years and 240 or 180 days as the case may be. I request to comment on the same.

But hitherto my understanding was even 5 years (i.e., 5*365) is not completed, 4 years and 240/180 days are enough to be eligible for gratuity. Kindly elucidate and distinguish between Interrupted service scenario and Uninterrupted Service scenario.   

Regards

N B Nesur

I shall attempt to explain.Contineous service is uninterrupted service.Even if it is interrupted for any reason mentioned in sec 2A,it shall still be deemed to be uninterrupted service.In such case number of days need not be counted.However if the service is interrupted for any reason(other than reasons in sec. 2A),then one has to count days and if days worked in any year is equal to or more than 240 days,then it shall be considered as one year contineous service.Thus if an employee renders four years uninterrupted service and if the service is interrupted in fifth year,then if he has actually worked for equal or more than 240 days in fifth year,it shall be deemed that he has completed 5 years contineous service. I hope to have made myself clear.

Thank you Mr. Jagadish for your reply and now it is more clear to me.

However, in case of Mettur Beardsell Ltd., Madras Vs. RLC(C) 1998 LLR 1072(Mad) it is not known whether the case was on interrupted service or uninterrupted service.   It just mentioned as since the employee was in continuous  service for more than 4 year and 240 days, he is eligible for gratuity. It did not mentioned specifically  whether there was an interruption of service or not. Apparently, it gives the impression/situation of UNINTERRUPTED SERVICE of that employee.  In the absence of clarity of fact of the case, it is difficult to apply this for both situations. 

I agree with your interpretation/opinion in the above reply. Pl let me know if you have any additional comments on same.

Regards

N B Nesur

I have not read the case  of Mettur Beardsell.How ever if it states the contineous service of 4 years and 240 days,that may mean that in fifth year service was interrupted after 240 days.for some reason like resignation,termination etc.Therefore it is a case of interruption of service in fifth year.Since 240 days are completed,it shall be deemed that one year contineous service is rendered in fifth year and therefore requirement of five years contineous service is met.This is my interpretation.Since I have not read the judgement,it is mere possible interpretation.                       

Thanks u lot.