Gratuity in software industry

Originally posted by : AS
	Hi, I am a software Engineer by profession. Last Year I resigned and joined a new company. In my previous company, I have completed total 4 years and 10 months of service. During my notice period, I had a discussion with HR Manager on Gratuity and he said as I completed more than 4.5 years of service so I will receive the gratuity. However, its been around one year now and I didn't receive it. When I called HR manager, he simply said that I am not eligible for Gratuity because I have not completed the 240 days rule. I told him that 240 days rule is applicable where the Organization works 6 days a week but we work 5 days a week and as per that, 190 days service will be considered including leave which also includes paid and unpaid leave. I verified all the payslip of the last year and found that there were total 193 working days. I worked for 188 days and remaining 5 days were LOP. HR manager said that share the Legal Document mentioning this (not the link/ screenshot/ printout of a forum). Can anyone please let me know whether I am applicable for Gratuity or not? and If applicable please share the official legal document link which I can share with HR Manager. Thanks.

Although you have posted that you are a software engineer but what is the nature of establishment with which you have been working?

IT is believed that all transactions posted by you are verbal.

Or you have narrated and minuted in writing under proper acknowledgment!

While posting such queries employee should post basic information!

What is this establishment; Govt, Private, Commercial, Industrial?

What is its nature of business say; IT, ITeS?

How many persons are employed in it?

What is your designation and nature of duties?

How many persons report to you?

Do you have any power to sanction leave/increment/appoint/terminate/appraise etc etc ?

You are in which state? Since how many months you are working? Are you under probation period or your service is confirmed in writing?

Do standing orders (model/certified) apply to establishment and your designation?

What is notice period as per appointment letter/offer letter and what was notice period tendered by you?

Was ever any stinker, memo, show cause notice on any misconduct issued to you?

Does the establishment have its appraisal system? Do you have copy of signed appraisal forms, matrix, KRA’s, performance date? How was your performance?

Are you a member of employee’s/trade unions?

Has the establishment issued/supplied, offer letter, appointment letter, salary slips of all months, PF number and a/c slips of all years, ESIC card, correct FnF statement, Form 16 as per correct FnF statement, acknowledgment and acceptance of notice of resignation/final resignation, acknowledgment of handover of charge, NOC/NDC……………?

You may revert to relevant points.

Name of company etc is not required so don’t post names etc .

1st thing 1st; you may narrate in gentle and amiable manner all transactions (verbal/written) in writing addressing to designated HR personnel handling Gratuity and good offices of appointing authority, MD,CEO…and mention that ‘Notice of Determination of Gratuity, payment of Gratuity, requisite forms if any has not been supplied to you despite confirmation to pay earlier in office…..

Thus try to transfer the onus and avoid delay from your (employee’s) end..

Hi Kumar,

Thanks for the reply !! You are right that all the discussion regarding the Gratuity is verbal. Below are the answers to queries you posted

1. It is a Private Limited Company and the nature of the business is IT, ITeS. 
2. There are around 200 employees.
3. My designation was Team Lead.
4. Total 5 people were reporting to me and there was no power to sanction leave/increment/appoint/terminate/appraise
5. The company is in Maharastra State and I completed 4 years 10 months of service in last year April month.
6. The notice period was of 3 Months and I served it.
7. The establishment has its appraisal system. I have a copy of signed appraisal forms, matrix, KRA’s, performance date
8. No stinker, memo, show cause notice of any misconduct has been issued.
9. I have all the document i.e. offer letter, appointment letter, salary slips of all months, PF number and a/c slips of all years, ESIC card, correct FnF statement, Form 16 as per correct FnF statement, acknowledgment and acceptance of notice of resignation/final resignation, acknowledgment of handover of charge, NOC/NDC.
10. There are no employee’s/trade unions for Software Engineers as per my knowledge.

IT/ITeS companies are covered by (Name of state) Shops & Estbs Act ……..(  Bombay Shops & Estbs Act in your case)

GO thru;

THE PAYMENT OF GRATUITY ACT, 1972;1,2A,4,4A, 7,9

Especially;2A;

(2) Where an employee (not being an employee employed in a seasonal establishment) is not in continuous service within the meaning of clause (1), for any period of one year or six months, he shall be deemed to be in continuous service under the employer

(a) for the said period of one year, if the employee 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

(i) one hundred and ninety days, in the case of an employee employed below the ground in a mine or in an establishment which works for less than six days in a week; and

(ii) two hundred and forty days, in any other case:

https://maitri.mahaonline.gov.in/pdf/payment-of-gratuity-act-1972.pdf

IT is crystal clear;

IF establishment works for 6days/week then employee should have worked for 240days/year

IF establishment works for less than 6days/week (say 5days/week)  then employee should have worked for 190days/year

NO citation is required…

Here 190 or 240days include off days/holidays/approved leave also……

So your and HR person’s interpretations both are wrong…

In any case having (actually) worked for more than 190 days ( as per salary slip also) this HR person should not stand adamant/recalcitrant  anymore).

Note that Supreme Court of India has long back clarified the concept of ‘actually worked’ , ‘actually employed’ and there is NO confusion……….

Only the ill informed HR personnel and ill aimed employers try to deflect/confuse ill informed employees…

The properly informed employees are not taken for granted.

THE PAYMENT OF GRATUITY ACT, 1972 is statue and shall prevail upon any private contract/agreement/rule/policy/interpretation by employer or IT’s attorneys in Line Management/HR personnel/Admin etc etc

The authority as in Act or court of law shall not agree with contentions of the said HR personnel…

The attention to Sec; 9 and penalty (Rs.20000/) and punishment with jail term (6months) may be invited for ‘Whoever’ avoids to pay Gratuity..

You may also go thru;

THE PAYMENT OF GRATUITY (CENTRAL) RULES, 1972

https://maitri.mahaonline.gov.in/pdf/payment-of-gratuity-act-1972.pdf

and if required submit FormI to Controlling Authority and employer ( appropriate govt; state/central) that might be ALC….

Check locally in local O/o Labor Commissioner.

 You may also go thru;

The Payment of Gratuity (Maharashtra) Rules, 1972

https://www.esipf.com/labour-law/the%20gratuity%20act.pdf

Gratuity= {(Basic+DA)/26*15*NO. of years in service}

(Basic+DA) as per last drawn wages

No. of years=5 in your case for the purpose of calculation of Gratuity (as per your post take 4Y10M=5Y) .

You are entitled to get interest for delayed period @10%pa for the delayed period i.e. 30days after LWD!

Build irrefutable written record before you proceed further as already suggested..

There are many IT/ITeS employees unions and have been embraced by trade unions and have done a good job…

There are many threads at LCI o similar query e.g;

https://www.lawyersclubindia.com/forum/display.asp?cat_id=9&forum_id=49

You may also log onto my profile and go thru Articles e.g;

“Off days, holidays are counted in service period for the Payment of Gratuity!”

And download the judgments also…

A sensible employee retains access to unions and a very able senior LOCAL counsel of unshakable repute and integrity specializing in labor/service matters and having successful track record and worth his/her salt…

You should have spoken to elders of your family, competent and experienced well wishers and they could have guided and helped you long back…!

Notice period of 3 months must not be applicable in your case and you may go thru; Bombay Shops & Estbs Act; Sec 66

The Act ( and Bombay Shops & Estbs  Rules) shall prevail upon any private upon any private contract/agreement/appointment letter/offer letter/service rules/policy/interpretation by employer or IT’s attorneys in Line Management/HR personnel/Admin etc etc

The Act does not lay down any notice period for employees but lays down for employer…

BY equitable discretion also there should not be notice period more than 30days…if service is more than as prescribed in the Act ….

The ID Act does not lay down any notice period for employees but lays down for employer…( In case of retrenchment)

All above enactments mare available on website of Dept. of Labor Maharashtra..

Use the inputs provided in the threads, articles to update your knowledge, confidence level and your colleagues and community of employees…!

For local support and help get in touch with Unions..

Hi Kumar,

Thank you very much for the details and explanation.