Subject: Clarification on Gratuity Payment
Dear Ms. Sandhya,
I would like clarification on a scenario regarding the payment of gratuity under the Payment of Gratuity Act, 1972. Suppose an employee serves in an organization for 8 years continuously, claims the gratuity upon resignation, and receives the due amount. Later, after a year, the same employee joins another company and works there for 11 uninterrupted years. Can this employee claim gratuity again from the latter employer upon retirement after superannuation? Is it legally acceptable to make a double claim for gratuity? If not, what are the criteria that can prevent an employee from claiming gratuity from multiple employers?
Thank you, and I look forward to your response on the above query. Kindly send the reply to my email address.
Best regards,
Biswajit Pani
Email: bjpani@gmail.com
From India, Bhubaneswar
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13Dear Ms. Sandhya,
I would like clarification on a scenario regarding the payment of gratuity under the Payment of Gratuity Act, 1972. Suppose an employee serves in an organization for 8 years continuously, claims the gratuity upon resignation, and receives the due amount. Later, after a year, the same employee joins another company and works there for 11 uninterrupted years. Can this employee claim gratuity again from the latter employer upon retirement after superannuation? Is it legally acceptable to make a double claim for gratuity? If not, what are the criteria that can prevent an employee from claiming gratuity from multiple employers?
Thank you, and I look forward to your response on the above query. Kindly send the reply to my email address.
Best regards,
Biswajit Pani
Email: bjpani@gmail.com
From India, Bhubaneswar
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Hi Biswajit,
I think an employee is eligible for gratuity from their new employer if they have completed 5 years in that organization. If I am wrong, please correct me.
Eligibility for gratuity is as follows: An employee is eligible to receive gratuity payment only after completing five years of continuous service. Continuous service means providing uninterrupted service during that period, whether on superannuation, retirement, resignation, death, or disablement due to accident or disease. The condition of five years is waived if employment termination is due to death or disablement. However, interruptions like sickness, accident, leave, lay-off, strike, lockout, or cessation of work not caused by the employee will not be considered as a break in service (Section 4).
Regards,
Hemant Sailor
From India, New Delhi
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I think an employee is eligible for gratuity from their new employer if they have completed 5 years in that organization. If I am wrong, please correct me.
Eligibility for gratuity is as follows: An employee is eligible to receive gratuity payment only after completing five years of continuous service. Continuous service means providing uninterrupted service during that period, whether on superannuation, retirement, resignation, death, or disablement due to accident or disease. The condition of five years is waived if employment termination is due to death or disablement. However, interruptions like sickness, accident, leave, lay-off, strike, lockout, or cessation of work not caused by the employee will not be considered as a break in service (Section 4).
Regards,
Hemant Sailor
From India, New Delhi
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There is no rule saying that Gratuity cannot be claimed more than one time. Look, Gratuity is payable to any employee who has been in the continuous service of a company for more than 5 years.
Now, if "Mr. X" has worked in 'ABC Limited' for 6 years, then when he leaves the company, he is entitled to gratuity (Last Basic/26) x 15 x 6. And then if he joins 'DEF Limited' and works there for 11 years, then he can claim gratuity for the 11 years that he has worked at 'DEF Limited' (continuous service) which is calculated as (Last Basic/26) x 15 x 11.
Gratuity is purely a function of the number of years (minimum 5 years) an employee is in continuous service with a company. So it can be claimed any number of times, provided that he has been in the service of each of the companies (where he has worked) for more than 5 years.
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Now, if "Mr. X" has worked in 'ABC Limited' for 6 years, then when he leaves the company, he is entitled to gratuity (Last Basic/26) x 15 x 6. And then if he joins 'DEF Limited' and works there for 11 years, then he can claim gratuity for the 11 years that he has worked at 'DEF Limited' (continuous service) which is calculated as (Last Basic/26) x 15 x 11.
Gratuity is purely a function of the number of years (minimum 5 years) an employee is in continuous service with a company. So it can be claimed any number of times, provided that he has been in the service of each of the companies (where he has worked) for more than 5 years.
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Hi, I think Hemant & abi is quiet right. I am eagerly waiting for next post on this subject.
From India, Nagpur
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From India, Nagpur
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Thank you to both Hemant & Abi for clarifying with examples regarding claiming gratuity from different employers serving for 5 years each continuously on different occasions. Now, it's clear that there is no bar to claim the gratuity more than once if eligible as per the statute. Thank you both once again.
[Biswajit Pani]
From India, Bhubaneswar
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[Biswajit Pani]
From India, Bhubaneswar
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Hi,
We have a minimum of 3 years to be eligible for gratuity as compared to 5 years (part of employee welfare scheme and retention). Also, if you are in your 4th year of service and have completed 6 months, you will be eligible for 4 years of gratuity.
Regards,
Radhika
From India, Bangalore
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We have a minimum of 3 years to be eligible for gratuity as compared to 5 years (part of employee welfare scheme and retention). Also, if you are in your 4th year of service and have completed 6 months, you will be eligible for 4 years of gratuity.
Regards,
Radhika
From India, Bangalore
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Ms. Radhika,
Can you please clarify the eligibility for claiming gratuity under the Payment of Gratuity Act, 1972? As per the statute, we all know it should be 5 years of continuous service to claim the gratuity amount. However, I came to know from your reply in response to one post that the eligibility is 3 years of service. Is it under special circumstances that the service period is reduced to 3 years instead of 5 years, or has the corresponding section been amended in the statute, i.e., the Payment of Gratuity Act, 1972? If it has been amended, could you please provide me with the amendment number? I hope to receive a reply soon from your end. Thank you.
[Biswajit Pani]
E-mail Id:
From India, Bhubaneswar
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Can you please clarify the eligibility for claiming gratuity under the Payment of Gratuity Act, 1972? As per the statute, we all know it should be 5 years of continuous service to claim the gratuity amount. However, I came to know from your reply in response to one post that the eligibility is 3 years of service. Is it under special circumstances that the service period is reduced to 3 years instead of 5 years, or has the corresponding section been amended in the statute, i.e., the Payment of Gratuity Act, 1972? If it has been amended, could you please provide me with the amendment number? I hope to receive a reply soon from your end. Thank you.
[Biswajit Pani]
E-mail Id:
From India, Bhubaneswar
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Hi,
Even though my current company's employees need not be covered under the Gratuity Act, for the benefit of the employees, the company has gone ahead and created a privately administered Gratuity trust with necessary government approvals.
Therefore, all employees are eligible for gratuity as per the Gratuity Act. An employee is eligible for gratuity after completion of 3 years of continuous service with the company. Fifteen days of basic salary will be paid for every year of completed service or part thereof in excess of 6 months. Gratuity will be paid at the time of retirement or resignation of the employee.
The amount so paid is taxable as per the Income Tax Act, 1961, beyond the limits specified therein.
Regards,
Radhika
From India, Bangalore
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Even though my current company's employees need not be covered under the Gratuity Act, for the benefit of the employees, the company has gone ahead and created a privately administered Gratuity trust with necessary government approvals.
Therefore, all employees are eligible for gratuity as per the Gratuity Act. An employee is eligible for gratuity after completion of 3 years of continuous service with the company. Fifteen days of basic salary will be paid for every year of completed service or part thereof in excess of 6 months. Gratuity will be paid at the time of retirement or resignation of the employee.
The amount so paid is taxable as per the Income Tax Act, 1961, beyond the limits specified therein.
Regards,
Radhika
From India, Bangalore
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Hi,
The Gratuity Act is one of the welfare acts, and it states that gratuity is payable for the loyalty of the employee. If a person has worked for more than 5 years, he is eligible for gratuity regardless of how many companies he has worked for. Every time he has worked for more than 5 years, he is eligible.
Sumit
From India, Bangalore
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The Gratuity Act is one of the welfare acts, and it states that gratuity is payable for the loyalty of the employee. If a person has worked for more than 5 years, he is eligible for gratuity regardless of how many companies he has worked for. Every time he has worked for more than 5 years, he is eligible.
Sumit
From India, Bangalore
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Hi,
An employee who, over a 30-year service tenure, has worked in six different organizations (each for a continuous period of 5 years) will be eligible to receive gratuity from all six organizations. The key factor to consider is one's eligibility.
Cyril
From India, Nagpur
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An employee who, over a 30-year service tenure, has worked in six different organizations (each for a continuous period of 5 years) will be eligible to receive gratuity from all six organizations. The key factor to consider is one's eligibility.
Cyril
From India, Nagpur
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Dear Members Is it required to send Notice for holding meeting of Gratuity Trust ?? If yes What should be the Notice period ??
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Hi,
I have been working in a private organization for the last ten years and nine months. Recently, I've submitted my resignation letter to the company and am serving my notice period. I have applied to the company for payment of my gratuity. The company is saying that since my service is more than ten (10) years, the gratuity amount will be transferred to the company where I am going to join. Is this correct? Kindly advise me on what I should do now.
Regards,
UK Ghosh
From India, Howrah
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I have been working in a private organization for the last ten years and nine months. Recently, I've submitted my resignation letter to the company and am serving my notice period. I have applied to the company for payment of my gratuity. The company is saying that since my service is more than ten (10) years, the gratuity amount will be transferred to the company where I am going to join. Is this correct? Kindly advise me on what I should do now.
Regards,
UK Ghosh
From India, Howrah
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Sec 4(1) of the Payment of Gratuity Act is clear: On retirement/resignation after completing 5 years of continuous service. Therefore, the question of transferring gratuity to a new company is not applicable. Moreover, how can they be sure you are joining another company?
From India, Pune
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From India, Pune
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Gratuity can be claimed any number of times when an employee works for more than 5 years in each company and resigns. It is legal. Gratuity needs to be settled when an employee leaves and cannot be transferred unless it is within the same sister company, where the service is continuing and accounted.
From India, Hyderabad
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From India, Hyderabad
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Hi,
Is a retired employee eligible for gratuity if he joins a company at the age of 61 (after full-time employment and retirement from the government sector) and continues for over 10 years in direct employment? The company does not create any gratuity fund.
From India, Kolkata
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Is a retired employee eligible for gratuity if he joins a company at the age of 61 (after full-time employment and retirement from the government sector) and continues for over 10 years in direct employment? The company does not create any gratuity fund.
From India, Kolkata
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Dear Biswajit,
You have desired to know whether the eligibility for claiming gratuity under the Payment of Gratuity Act, 1972, can be reduced to three years from the stipulated period of five years as mentioned in Section 4 of the Act, and whether there is any corresponding amendment in the Act to support the claim of Ms. Radhika.
In reply to your query, I would like to clarify that the Act has an inbuilt provision in Section 4(5) which reads as follows:
"Nothing in this section shall affect the right of an employee to receive better terms of gratuity under any award or agreement or contract with the employer."
I hope the above will clear your doubt.
Thank you.
BS Kalsi
From India, Mumbai
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You have desired to know whether the eligibility for claiming gratuity under the Payment of Gratuity Act, 1972, can be reduced to three years from the stipulated period of five years as mentioned in Section 4 of the Act, and whether there is any corresponding amendment in the Act to support the claim of Ms. Radhika.
In reply to your query, I would like to clarify that the Act has an inbuilt provision in Section 4(5) which reads as follows:
"Nothing in this section shall affect the right of an employee to receive better terms of gratuity under any award or agreement or contract with the employer."
I hope the above will clear your doubt.
Thank you.
BS Kalsi
From India, Mumbai
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Hi Ghosh,
You have mentioned that you have worked in a private organization for ten years and nine months and has now submitted your resignation. The utterance by the company that the amount of gratuity shall be transferred to the new company is absoulately INCORRECT and MISLEADING . The Act doesn't have such a stipulation of transfer of the gratuiy amount. You may refer to Section 4 of the Act, which contains the following provisions -
"Gratuity is payable to an employee (nominee – in case of death of employee) who has rendered A continuous services of five years or more on his termination of employment, superannuation, retirement or RESIGNATION.
Completion of continuous service of five years is not necessary where the termination of employment is due to death of disablement."
You can discuss the matter with the HRD head quoting the provisions as mentioned above failing which you need to file an application prescribed under the state rules before the the competent officer of the state Labour department.
Regards,
BS Kalsi
From India, Mumbai
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You have mentioned that you have worked in a private organization for ten years and nine months and has now submitted your resignation. The utterance by the company that the amount of gratuity shall be transferred to the new company is absoulately INCORRECT and MISLEADING . The Act doesn't have such a stipulation of transfer of the gratuiy amount. You may refer to Section 4 of the Act, which contains the following provisions -
"Gratuity is payable to an employee (nominee – in case of death of employee) who has rendered A continuous services of five years or more on his termination of employment, superannuation, retirement or RESIGNATION.
Completion of continuous service of five years is not necessary where the termination of employment is due to death of disablement."
You can discuss the matter with the HRD head quoting the provisions as mentioned above failing which you need to file an application prescribed under the state rules before the the competent officer of the state Labour department.
Regards,
BS Kalsi
From India, Mumbai
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Payment of Gratuity Act, 1972 & The Rules.ppt
THE PAYMENT OF GRATUITY ACT 1972.doc