Dear All,
I have a query regarding the calculation of Gratuity. If an employee joined the company on 01/07/2012 and their last working day is 19/01/2019, should we consider their tenure as 6 years or 7 years? They have completed 6 years, 6 months, and 18 days. Please let me know.
Thanks.
From India, Mumbai
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1I have a query regarding the calculation of Gratuity. If an employee joined the company on 01/07/2012 and their last working day is 19/01/2019, should we consider their tenure as 6 years or 7 years? They have completed 6 years, 6 months, and 18 days. Please let me know.
Thanks.
From India, Mumbai
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Thanks everyone for your valuable inputs. Will take his tenure as 7 years for Gratuity calculation.
From India, Mumbai
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From India, Mumbai
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Please note sub-section 2 of Sec. 4 of the Act in this respect:
"Payment of Gratuity Act, 1972
Section 4
Payment of gratuity.
(1) Gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years, - (a) on his superannuation, or (b) on his retirement or resignation, or (c) on his death or disablement due to accident or disease: Provided that the completion of continuous service of five years shall not be necessary where the termination of the employment of any employee is due to death or disablement: Provided further that in the case of death of the employee, gratuity payable to him shall be paid to his nominee or, if no nomination has been made, to his heirs, and where any such nominees or heirs is a minor, the share of such minor shall be deposited with the controlling authority who shall invest the same for the benefit of such minor in such bank or other financial institution, as may be prescribed, until such minor attains majority.] Explanation: For the purposes of this section, disablement means such disablement as incapacitates an employee for the work which he was capable of performing before the accident or disease resulting in such disablement.
(2) For every completed year of service or part thereof in excess of six months, the employer shall pay gratuity to an employee at the rate of fifteen days' wages based on the rate of wages last drawn by the employee concerned."
Thank you.
From India, Bangalore
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"Payment of Gratuity Act, 1972
Section 4
Payment of gratuity.
(1) Gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years, - (a) on his superannuation, or (b) on his retirement or resignation, or (c) on his death or disablement due to accident or disease: Provided that the completion of continuous service of five years shall not be necessary where the termination of the employment of any employee is due to death or disablement: Provided further that in the case of death of the employee, gratuity payable to him shall be paid to his nominee or, if no nomination has been made, to his heirs, and where any such nominees or heirs is a minor, the share of such minor shall be deposited with the controlling authority who shall invest the same for the benefit of such minor in such bank or other financial institution, as may be prescribed, until such minor attains majority.] Explanation: For the purposes of this section, disablement means such disablement as incapacitates an employee for the work which he was capable of performing before the accident or disease resulting in such disablement.
(2) For every completed year of service or part thereof in excess of six months, the employer shall pay gratuity to an employee at the rate of fifteen days' wages based on the rate of wages last drawn by the employee concerned."
Thank you.
From India, Bangalore
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Hi,
6 years and 6 months and 18 days - In this case, the employee is eligible for 6 years only and not 7 years. If the employee completed 6 years and 240 days (which is 8 months), then it can be considered as 7 years.
From India, Madras
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6 years and 6 months and 18 days - In this case, the employee is eligible for 6 years only and not 7 years. If the employee completed 6 years and 240 days (which is 8 months), then it can be considered as 7 years.
From India, Madras
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Mr. V M Lakshminarayanan, with all respect to you and your position as a Sr. Manager (HR), let me ask one question: have you read the Payment of Gratuity Act? If yes, please read section 4(2) of the Act once more. If not, please do not comment without reading the Act.
I apologize to everyone in this forum if I have been very harsh; I feel sorry when a person holding a senior position in HR interprets the law incorrectly and gives wrong advice.
From India, Kannur
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I apologize to everyone in this forum if I have been very harsh; I feel sorry when a person holding a senior position in HR interprets the law incorrectly and gives wrong advice.
From India, Kannur
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Mr. Madhu,
It is as per the verdict of the Chennai High Court for WP No. 2135 of 1987, 1998 LLR 1072 MADRAS mGa COURT, Honorable Mr. S.M. Abdul Wahab J. W.P. No. 2135 of 1987 decided on 12.6.1996, Mettur Beardsell Ltd. (represented by its Personnel Manager), Madras, vs. Regional Labour Commissioner (Central): (Authority under the Payment of Gratuity Act), Madras & Others.
Payment of Gratuity Act, 1972 - Sections 2(a), 2(b), 2(c), 2(e), and 2A - 'Continuous service' - Qualifying period of service by an employee - Entitlement of Gratuity - An employee rendering continuous service for a period of 240 days in a year will be deemed to have continued in service for 'one year as stipulated by Section 2A of the Act. Thus, an employee who has put in service for 10 months and 18 days for the fifth year subsequent to the first 4 years should be deemed to have completed continuous service of five years. His claim for gratuity is tenable.
From India, Madras
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It is as per the verdict of the Chennai High Court for WP No. 2135 of 1987, 1998 LLR 1072 MADRAS mGa COURT, Honorable Mr. S.M. Abdul Wahab J. W.P. No. 2135 of 1987 decided on 12.6.1996, Mettur Beardsell Ltd. (represented by its Personnel Manager), Madras, vs. Regional Labour Commissioner (Central): (Authority under the Payment of Gratuity Act), Madras & Others.
Payment of Gratuity Act, 1972 - Sections 2(a), 2(b), 2(c), 2(e), and 2A - 'Continuous service' - Qualifying period of service by an employee - Entitlement of Gratuity - An employee rendering continuous service for a period of 240 days in a year will be deemed to have continued in service for 'one year as stipulated by Section 2A of the Act. Thus, an employee who has put in service for 10 months and 18 days for the fifth year subsequent to the first 4 years should be deemed to have completed continuous service of five years. His claim for gratuity is tenable.
From India, Madras
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Dear friend,
Please read the subsection once again. I have extracted the relevant section for you to read without any ambiguity or interpretation. The act clearly states, "every completed year of service or part thereof in excess of six months." Your query pertains to the 'fraction of 6 months & 18 days,' is it not the "part thereof in excess of six months?"
I fail to understand what your confusion is on this matter, my friend. The Mettur case that you referenced is relevant to those who have not completed a full 5 years of continuous service. However, your query indicates that you have already exceeded the qualifying service requirement, which is above 6 years, 6 months, and 18 days.
Keep calm and reconsider.
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Payment of Gratuity Act, 1972
Section: 4 Payment of gratuity.
For every completed year of service or part thereof in excess of six months, the employer shall pay gratuity to an employee at the rate of fifteen days' wages based on the rate of wages last drawn by the employee.
From India, Bangalore
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Please read the subsection once again. I have extracted the relevant section for you to read without any ambiguity or interpretation. The act clearly states, "every completed year of service or part thereof in excess of six months." Your query pertains to the 'fraction of 6 months & 18 days,' is it not the "part thereof in excess of six months?"
I fail to understand what your confusion is on this matter, my friend. The Mettur case that you referenced is relevant to those who have not completed a full 5 years of continuous service. However, your query indicates that you have already exceeded the qualifying service requirement, which is above 6 years, 6 months, and 18 days.
Keep calm and reconsider.
----------
Payment of Gratuity Act, 1972
Section: 4 Payment of gratuity.
For every completed year of service or part thereof in excess of six months, the employer shall pay gratuity to an employee at the rate of fifteen days' wages based on the rate of wages last drawn by the employee.
From India, Bangalore
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FORM-F-NOMINATI ON OF GRATUITY.pdf
Gratuity Form I.doc