Dear Sridhar,
If they haven't appointed you afresh and your employment is continued, Yes, you will be entitled for your gratuity after the minimum eligibility period i.e. 4 years and 240 days of service. Please do tell if they employed you afresh or not.
From India, New Delhi
314If they haven't appointed you afresh and your employment is continued, Yes, you will be entitled for your gratuity after the minimum eligibility period i.e. 4 years and 240 days of service. Please do tell if they employed you afresh or not.
From India, New Delhi
Mr.Sridhar,
1)Changes in the constitution of the establishment is inconsequential in so far as the applicability of the P.G.Act is concerned and it will not have any negative impact on the length of service rendered by its employees. Conversion of an establishment from sole-proprietorship to that of partnership or to that of a limited co under the Companies Act,1956 etc is a mere cosmetic change in relation to the subject-matter of gratuity.
2) Since the application of the Act has already commenced, it will continue to apply not withstanding the subsequent changes in the establishment's constitution and the no of employees.
From India, Salem
1)Changes in the constitution of the establishment is inconsequential in so far as the applicability of the P.G.Act is concerned and it will not have any negative impact on the length of service rendered by its employees. Conversion of an establishment from sole-proprietorship to that of partnership or to that of a limited co under the Companies Act,1956 etc is a mere cosmetic change in relation to the subject-matter of gratuity.
2) Since the application of the Act has already commenced, it will continue to apply not withstanding the subsequent changes in the establishment's constitution and the no of employees.
From India, Salem
Advocate Shri Kamal Kant Ji, In my view the minimum eligibility period is 5 years completed service. Judgement of Madras HC is not binding in other states.
From India, Mumbai
From India, Mumbai
Dear Keshav,
This is not according to any judgment only. The same is given in the act itself. Also there are a lot of judgments on the same not only one. This is simple interpretation of the provision. The logic behind this is given below please understand the same.
Section 4 (1) says about the eligibility for gratuity. The section is given below.
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:
1[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.]
Now let us see the definition of one continuous year of service under section 2A
[2A. Continuous service.—For the purposes of this Act,—
(1) an employee shall be said to be in continuous service for a period if he has, for that period, been in uninterrupted service, including service which may be interrupted on account of sickness, accident, leave, absence from duty without leave (not being absence in respect of which an order 2[***] treating the absence as break in service has been passed in accordance with the standing orders, rules or regulations governing the employees of the establishment), lay-off, strike or a lock-out or cessation of work not due to any fault of the employee, whether such uninterrupted or interrupted service was rendered before or after the commencement of this Act;
(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 any employee employed below the ground in a mine or in an establish-ment which works for less than six days in a week; and
(ii) two hundred and forty days, in any other case;
Now in the light of the above provisions we can say that a person is eligible for Gratuity when he completes 4 year and 240 days in the fifth year.
Please revert in case of any further doubt.
From India, New Delhi
This is not according to any judgment only. The same is given in the act itself. Also there are a lot of judgments on the same not only one. This is simple interpretation of the provision. The logic behind this is given below please understand the same.
Section 4 (1) says about the eligibility for gratuity. The section is given below.
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:
1[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.]
Now let us see the definition of one continuous year of service under section 2A
[2A. Continuous service.—For the purposes of this Act,—
(1) an employee shall be said to be in continuous service for a period if he has, for that period, been in uninterrupted service, including service which may be interrupted on account of sickness, accident, leave, absence from duty without leave (not being absence in respect of which an order 2[***] treating the absence as break in service has been passed in accordance with the standing orders, rules or regulations governing the employees of the establishment), lay-off, strike or a lock-out or cessation of work not due to any fault of the employee, whether such uninterrupted or interrupted service was rendered before or after the commencement of this Act;
(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 any employee employed below the ground in a mine or in an establish-ment which works for less than six days in a week; and
(ii) two hundred and forty days, in any other case;
Now in the light of the above provisions we can say that a person is eligible for Gratuity when he completes 4 year and 240 days in the fifth year.
Please revert in case of any further doubt.
From India, New Delhi
Advocate Shri. Kamal Kant ji,
I respect your views. My views are different than you. I reserve my submission on my views till other members discuss on this issue. This may help in enhancing the knowledge of HR Community including me.
From India, Mumbai
I respect your views. My views are different than you. I reserve my submission on my views till other members discuss on this issue. This may help in enhancing the knowledge of HR Community including me.
From India, Mumbai
To all the members who are closely following thi thread:
This is in response to the divergent views being exchanged between our learned members Mr.Kamalkant n Mr.Korgaonkar.In this connection, I would like to invite ur kind attention to my reply posted on 25-02-13 for the query on 'eligibility for gratuity'raised by Ashima.Reiterating my brief view point,I add the following in order to clear the cloud of confusion:
'Eligibility for gratuity' is, in my considered opinion, entirely different from 'Entitlement to gratuity'. Normally,'eligibility' makes a person qualified for a certain right under a statute whereas, 'entitlement' enables the same person to stake a claim for the enforcement of that right.The difference may seem apparently very thin n subtle;but the implication is very much vast n deep.It is always correct that an entitled person is an eligible one but not necessarily the vice-versa. All will agree with me that what is contemplated under the P.G Act,1972 is a scheme of gratuity to industrial employees based on certain length of blemishless service.To be positively brought into the scheme, one should have certain qualifications.In the first place he should be an 'employee' as defined u/s 2(e) of the Act.Secondly there should be termination of his service on a/c of superannuation,retirement or resignation or death or disability due to accident or disease after rendering of not less than 5 years of continuous service.But the proviso to the sub-section provides the relaxation that the condition rendering of 5 yrs of service is not necessary in the case of death or disability.Therefore, in all other cases, if a person wants to take advantage of the gratuity scheme contemplated by the Act,he has to prove that his period of service was continuous for not less than 5yrrs.Se 4(1) incorporates the concept gratuity being a reward for long continuous n meritorious service.Adverting to the definition of continuous service u/s 2A, the insertion of the new sub-sec was consequent on the legislative intervention suggested by the Supreme Court in Lalappa Lingappa v Laxmi Vishnu Textile Mills Ltd(AIR1981-SC852).As I said in my earlier post, it is only for the specific purpose of arriving at the actual no of days worked in a particular period of time in order to ascertain the entitlement of gratuity for that period.In other words, the emphasis in S4(1) is on continuity of employment whereas in S 2A it is on uninterruption of employment.While considering the eligibility of workman for gratuity on voluntary resignation in Dharshan Engg Works v. Controlling Authority (1983 Lab IC) the Supreme Court held that the minimum period of qualifying service for 5 yrs by a workman for being eligible for gratuity on voluntary resignation u/s 4(b) of the Act could not be stamped as sufficient long minimum in the context of making him stick to the employer.In construing the word 'workman' insec 33C(2) OF the I.D Act,1947 in National Buldg Construction Corpn case (AIR 1972 SC1579) the Supreme C ourt held that the word included adismissed workman also though in the definition of that word a dismissed workman is included only for the purpose of industrial disputes u/s 10.Again quoting yet two other judgments of hon'ble Supreme Court in AIR1997 SC628 AND ONGC (1997)2SCC 42 I conclude my reply with the following observations of the Supreme Court:
"While interpreting a definition, it has to be borne in mind that the interpretation placed on it should not only not repugnant to the context, it should also be such as would aid the achievement of the purpose which is sought to be served by the Act.A construction which would defeat or was likely defeat the purpose of the Act has to be ignored n not accepted."
From India, Salem
This is in response to the divergent views being exchanged between our learned members Mr.Kamalkant n Mr.Korgaonkar.In this connection, I would like to invite ur kind attention to my reply posted on 25-02-13 for the query on 'eligibility for gratuity'raised by Ashima.Reiterating my brief view point,I add the following in order to clear the cloud of confusion:
'Eligibility for gratuity' is, in my considered opinion, entirely different from 'Entitlement to gratuity'. Normally,'eligibility' makes a person qualified for a certain right under a statute whereas, 'entitlement' enables the same person to stake a claim for the enforcement of that right.The difference may seem apparently very thin n subtle;but the implication is very much vast n deep.It is always correct that an entitled person is an eligible one but not necessarily the vice-versa. All will agree with me that what is contemplated under the P.G Act,1972 is a scheme of gratuity to industrial employees based on certain length of blemishless service.To be positively brought into the scheme, one should have certain qualifications.In the first place he should be an 'employee' as defined u/s 2(e) of the Act.Secondly there should be termination of his service on a/c of superannuation,retirement or resignation or death or disability due to accident or disease after rendering of not less than 5 years of continuous service.But the proviso to the sub-section provides the relaxation that the condition rendering of 5 yrs of service is not necessary in the case of death or disability.Therefore, in all other cases, if a person wants to take advantage of the gratuity scheme contemplated by the Act,he has to prove that his period of service was continuous for not less than 5yrrs.Se 4(1) incorporates the concept gratuity being a reward for long continuous n meritorious service.Adverting to the definition of continuous service u/s 2A, the insertion of the new sub-sec was consequent on the legislative intervention suggested by the Supreme Court in Lalappa Lingappa v Laxmi Vishnu Textile Mills Ltd(AIR1981-SC852).As I said in my earlier post, it is only for the specific purpose of arriving at the actual no of days worked in a particular period of time in order to ascertain the entitlement of gratuity for that period.In other words, the emphasis in S4(1) is on continuity of employment whereas in S 2A it is on uninterruption of employment.While considering the eligibility of workman for gratuity on voluntary resignation in Dharshan Engg Works v. Controlling Authority (1983 Lab IC) the Supreme Court held that the minimum period of qualifying service for 5 yrs by a workman for being eligible for gratuity on voluntary resignation u/s 4(b) of the Act could not be stamped as sufficient long minimum in the context of making him stick to the employer.In construing the word 'workman' insec 33C(2) OF the I.D Act,1947 in National Buldg Construction Corpn case (AIR 1972 SC1579) the Supreme C ourt held that the word included adismissed workman also though in the definition of that word a dismissed workman is included only for the purpose of industrial disputes u/s 10.Again quoting yet two other judgments of hon'ble Supreme Court in AIR1997 SC628 AND ONGC (1997)2SCC 42 I conclude my reply with the following observations of the Supreme Court:
"While interpreting a definition, it has to be borne in mind that the interpretation placed on it should not only not repugnant to the context, it should also be such as would aid the achievement of the purpose which is sought to be served by the Act.A construction which would defeat or was likely defeat the purpose of the Act has to be ignored n not accepted."
From India, Salem
Dear Uma Kanth,
Nice reply but not everybody will be able to understand the difference in both. What we are discussing here is that if a person is entitled for gratuity when he completes 4 years and 240 days which is also as per my personal numerous experiences or exactly after 5 years from the date of appointment. Gratuity Act is a beneficial legislation and while interpreting any provision of any beneficial legislation we have to give the most liberal interpretation possible. In Lalappa Case (copy Attached) the question before supreme court was regarding the Continuous Services. But while deciding the entitlement of gratuity we have to see that in fifth year the year completes in 240 days as given in the act or in exact 5 year from the appointment date.
In my opinion 240 days makes 1 completed year of service as per gratuity act hence a person is entitled for gratuity when he completes 4 years and 240 days of Continuous Services with one employer.
From India, New Delhi
Nice reply but not everybody will be able to understand the difference in both. What we are discussing here is that if a person is entitled for gratuity when he completes 4 years and 240 days which is also as per my personal numerous experiences or exactly after 5 years from the date of appointment. Gratuity Act is a beneficial legislation and while interpreting any provision of any beneficial legislation we have to give the most liberal interpretation possible. In Lalappa Case (copy Attached) the question before supreme court was regarding the Continuous Services. But while deciding the entitlement of gratuity we have to see that in fifth year the year completes in 240 days as given in the act or in exact 5 year from the appointment date.
In my opinion 240 days makes 1 completed year of service as per gratuity act hence a person is entitled for gratuity when he completes 4 years and 240 days of Continuous Services with one employer.
From India, New Delhi
Thanks Mr.Kamal!
Simply put, eligibility for gratuity will arise only when the employee completes his 5th year of service in the same estt ie., there is continuity of employment up to 5 years. A s you say that suppose he leaves his employment on completion of the 240th day of service, he will not be fulfilling the required minimum length of service from the date of entry. that's my point
From India, Salem
Simply put, eligibility for gratuity will arise only when the employee completes his 5th year of service in the same estt ie., there is continuity of employment up to 5 years. A s you say that suppose he leaves his employment on completion of the 240th day of service, he will not be fulfilling the required minimum length of service from the date of entry. that's my point
From India, Salem
Dear Shri Umakanthan
I find the discussion very interesting , more so for the technical deftness with which you explained the scope of Sec.4(1) and Sec.2-A and the expressions ‘Eligibility’ and ‘Entitlement’. However, without going into legal nuances of the discussion in order to keep it simple, I may say that there is no difficulty in determining an employee’s eligibility with reference Sec.4(1) where he is in employment under an employer for five years uninterruptedly. However, the difficulty arises when an employee is not able to complete the fifth year or the last 12 months since he gets terminated after serving eight or nine months.
If the eligibility is to be determined solely on the basis of Sec. 4(1), he becomes ineligible. To deal with such contingencies, Sec. 2-A, as you are well aware, has been introduced where in a deeming provision was incorporated under Sub-Sec.(2)(a) &(b) of Sec.2A. This suggests that an employee’s eligibility, in fact, needs to be determined with reference to Sec.4(1) read with Sec.2-A but not in isolation since Sec.2-A defines what is ‘continuous service referred in Sec.4(1) . Thus though technically, the eligibility is to be determined on the basis of continuous service of 5 years under Sec.4(1) but practically, the Act renders eligible an employee who completed 4 years and 8 months(240 days) or thereabouts. It being so, the view of Mr.Kamalkant finds support in the aforesaid legal provisions.
B.Saikumar
HR & LabourLaw Advisor
Mumbai
From India, Mumbai
I find the discussion very interesting , more so for the technical deftness with which you explained the scope of Sec.4(1) and Sec.2-A and the expressions ‘Eligibility’ and ‘Entitlement’. However, without going into legal nuances of the discussion in order to keep it simple, I may say that there is no difficulty in determining an employee’s eligibility with reference Sec.4(1) where he is in employment under an employer for five years uninterruptedly. However, the difficulty arises when an employee is not able to complete the fifth year or the last 12 months since he gets terminated after serving eight or nine months.
If the eligibility is to be determined solely on the basis of Sec. 4(1), he becomes ineligible. To deal with such contingencies, Sec. 2-A, as you are well aware, has been introduced where in a deeming provision was incorporated under Sub-Sec.(2)(a) &(b) of Sec.2A. This suggests that an employee’s eligibility, in fact, needs to be determined with reference to Sec.4(1) read with Sec.2-A but not in isolation since Sec.2-A defines what is ‘continuous service referred in Sec.4(1) . Thus though technically, the eligibility is to be determined on the basis of continuous service of 5 years under Sec.4(1) but practically, the Act renders eligible an employee who completed 4 years and 8 months(240 days) or thereabouts. It being so, the view of Mr.Kamalkant finds support in the aforesaid legal provisions.
B.Saikumar
HR & LabourLaw Advisor
Mumbai
From India, Mumbai
Thank u Mr.Saikumar!
Yes---I do agree that technically speaking an employee earns continuous service on the date of completion of 240 days in the preceding 12 calender months w.r.to the date of termination on a/c of resignation.At the same time 5 yrs of continuous service has to be reckoned w.r.to the date of entry only.When the date of resignation falls on a day before the actual date of completion of 5 yrs, certainly he could not have completed 240 days in the preceding 12 calender months because every block of 12 calender months will have to be pushed back prior to the date of entry.Such an untenable approach will result in unwarranted anomaly. That is why I insist THAT the definition u/s 2A ,being for a different purpose, should not be read conjunctively with S4(1) because of the qualifying phrase " not less than five years."When the Law prescribes a condition by means of specific time or number or process or gender or category or class of people it has to be strictly observed according to the purpose and no humane approach emanating from tendencies of grace n compassion will have any room.
With kind regards n thanks again
From India, Salem
Yes---I do agree that technically speaking an employee earns continuous service on the date of completion of 240 days in the preceding 12 calender months w.r.to the date of termination on a/c of resignation.At the same time 5 yrs of continuous service has to be reckoned w.r.to the date of entry only.When the date of resignation falls on a day before the actual date of completion of 5 yrs, certainly he could not have completed 240 days in the preceding 12 calender months because every block of 12 calender months will have to be pushed back prior to the date of entry.Such an untenable approach will result in unwarranted anomaly. That is why I insist THAT the definition u/s 2A ,being for a different purpose, should not be read conjunctively with S4(1) because of the qualifying phrase " not less than five years."When the Law prescribes a condition by means of specific time or number or process or gender or category or class of people it has to be strictly observed according to the purpose and no humane approach emanating from tendencies of grace n compassion will have any room.
With kind regards n thanks again
From India, Salem
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Gratuity Act-Teachers-Ma dhya Pradesh.docx
Payment of Gratuity Act, 1972 & The Rules.ppt