Soumava Banerjee (Manager) 16 April 2011

Gratuity

Sir, I have completed continuous working of 4 years 7 months 11 days in private company and resigned from the services and accepted by my employer. I am told that person who has completed 4 year and 240 days continuous working in 5 th year is eligible for gratuity payment. Can you guide me whether I am eligible for the same. If so, can you provide the case report and supreme/ high court judgement on the same. Your early reply shall be highly appreciated. With Regards, Soumava Banerjee

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3 Replies

Nitin Asalkar (Head - HR) 16 April 2011

Hi, Gratuity is only payable after completion of 5 years of continuous service only.

Hence you will not be eligible for gratuity.

Regards

Nitin Asalkar

P. SRIDAR (Law Professional) 19 April 2011

Hi,

As per Payment of Gratuity Act, 1972, any employees become elegible for the gratuity when he has completed five years service. The employee who has worked for 240 days in a year, then a year is treated complete year. Since the employee has completed four years and 240 days, he/she will be elegible for gratuity but after the completion of five years whether works for remaining period beyound 240 days or not.

Sridar

Deputy Manager-HR & Admin

Sowmia (Assistant Manager) 19 April 2011

As per the recent judgement , an employee who has completed 4 years 10 months & 18 days of service will be eligible for gratuity.

Section 4 of the Payment of Gratuity Act, 1972 provides that an employee will entitled to gratuity on completion of countinuous service of 5 years and while clarifying the 5 years complete service, Andhra Pradesh Hight Court had held that the minimum period for becoming eligible for payment of gratuity should not be less than 5 years since it should be complete 5 year service. It was further clarified that the words or part in excess of six months' are only meant for the purposes of computation of gratuity for the subsequent year or years to first complete 5 years. It was also held that if an employee has worked for 4 years 11 months and 10 days, he will not be eligible for gratuity for want of completion of 5 years. Further in a subsquent case, MADRAS HIGH COURT while relying upon the clarification by the SUPREME COURT pertaining to 240 working days in one year will be deemed to be continuous serice of one year meaning thereby that there should not be complete 12 calender months' service. MADRAS HIGH COURT has further held that an employee, who has put in service of 4 Years 10 Months and 18 Days in the 5 years, will be entitled to gratuity.

Case Ref. : Mettur Beardsell Ltd., Madras v. Regional Lab. Commissioner (Appellate Authority under Payment of Gratuity Act), Madras etc., 1998 (3) LLN 414.