Dear John,
It seems you are a student and you are conducting research on gratuity eligibility. I am very new to this forum, not even completing 100 days here. However, I wish to advise you not to draw any conclusions on any subject solely based on views expressed here. Do not rely on links or Google, or even media news. Instead, refer to the latest editions of Bare Acts, case laws, and other authentic materials. Form your own interpretation, engage with experts around you, and logically analyze the subject.
On the current topic, you should also read the draft code on the social security bill. If the Government is considering lowering the gratuity threshold, it should be reflected in the draft bill. There have been many suggestions like this over the years, but they have not been included in the draft bill. Yet, we continue to discuss them as if they are existing laws.
I am not implying that the lower threshold will never be implemented, but when it does, we can discuss it then. Even if it is introduced, it will not have a retrospective effect. Currently, the law states that one must complete 5 years of service to be eligible for gratuity. The exception is the High Court jurisdiction in Chennai and Kerala.
One may receive gratuity payment even without completing 4 years and 240 days. This should not be misunderstood as the law, though. No one will object to receiving gratuity early, but it does not change the legal requirements.
Kind regards,
[Your Name]
From India, Mumbai
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209It seems you are a student and you are conducting research on gratuity eligibility. I am very new to this forum, not even completing 100 days here. However, I wish to advise you not to draw any conclusions on any subject solely based on views expressed here. Do not rely on links or Google, or even media news. Instead, refer to the latest editions of Bare Acts, case laws, and other authentic materials. Form your own interpretation, engage with experts around you, and logically analyze the subject.
On the current topic, you should also read the draft code on the social security bill. If the Government is considering lowering the gratuity threshold, it should be reflected in the draft bill. There have been many suggestions like this over the years, but they have not been included in the draft bill. Yet, we continue to discuss them as if they are existing laws.
I am not implying that the lower threshold will never be implemented, but when it does, we can discuss it then. Even if it is introduced, it will not have a retrospective effect. Currently, the law states that one must complete 5 years of service to be eligible for gratuity. The exception is the High Court jurisdiction in Chennai and Kerala.
One may receive gratuity payment even without completing 4 years and 240 days. This should not be misunderstood as the law, though. No one will object to receiving gratuity early, but it does not change the legal requirements.
Kind regards,
[Your Name]
From India, Mumbai
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Dear Friends,
Further to my earlier post, I wish to make it clear that I do not disrespect the different view or interpretation. It has to be justifiable or have some authentic supporting.
I respect the views on gratuity eligibility based on judgments by the HC at the judicature of Chennai and Kerala, but that is not applicable outside its judicature. The law has also not been amended. Even in the draft code bill, this is not taken care of.
If the Madras HC judgment of 1998 is applicable all over India, then how was the gratuity claim of Sreeja upheld by the controlling authority subsequent to this judgment, and the appellate authority reversed the decision, accepting the employer's contention that gratuity entitlement would arise only on completion of five continuous years of service?
I am not denying that one can apply the analogy of these judgments while arguing the case for payment of gratuity for 4 years and 240 days.
From India, Mumbai
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Further to my earlier post, I wish to make it clear that I do not disrespect the different view or interpretation. It has to be justifiable or have some authentic supporting.
I respect the views on gratuity eligibility based on judgments by the HC at the judicature of Chennai and Kerala, but that is not applicable outside its judicature. The law has also not been amended. Even in the draft code bill, this is not taken care of.
If the Madras HC judgment of 1998 is applicable all over India, then how was the gratuity claim of Sreeja upheld by the controlling authority subsequent to this judgment, and the appellate authority reversed the decision, accepting the employer's contention that gratuity entitlement would arise only on completion of five continuous years of service?
I am not denying that one can apply the analogy of these judgments while arguing the case for payment of gratuity for 4 years and 240 days.
From India, Mumbai
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For eligibility of payment of gratuity, completion of 4 years and 240 days is required instead of 4 years and 183 days. So, payment should not be done if eligibility is not completed.
Thanks & Regards, Sumit Kumar Saxena
From India, Ghaziabad
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Thanks & Regards, Sumit Kumar Saxena
From India, Ghaziabad
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Dear friends,
Eligibility for gratuity payment for those who have served less than 5 years of "continuous service" has been discussed repeatedly in this forum. Many establishments have accepted and paid gratuity based on the Madras High Court judgment, which concluded that 4 years and 240 days in the 5th year would meet the eligibility criteria. However, others have raised doubts about whether the Madras HC judgment automatically applies to other states, as there has been no clear amendment to the Act specifying a "5-year" requirement. This debate persists even though the Honorable Supreme Court has also confirmed that 4 years plus 240 days in the 5th year meets the eligibility criteria in the case of "LALAPPA LINGAPPA & ORS V. LAXMI VISHNU TEXTILE MILLS LTD., SHOLAPUR [1981] RD-SC 29 (11 February 1981)".
I believe it is appropriate to state that the contents of this judgment are applicable not only to the state of Maharashtra, where the cause of action originated, but to the entire nation as per the Constitution of India. In addition to this Supreme Court judgment, another SC judgment upholding the 4 years + 240 days norm for determining "continuous service" is also available, which I referenced in this column a few years ago and will repost shortly.
I may quote excerpts from the cited SC judgment as follows (it is lengthy to reproduce here but worth the space and time taken to remove lingering doubts):
"The significance of this legislation lies in the acceptance of the principle of gratuity as a compulsory, statutory retiral benefit. For a proper appreciation of the question involved, it is necessary to set out the relevant provisions of the Act. Sub-section (1) of s. 4 reads as follows: 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..."
References:
- https://www.citehr.com/473683-gratui...ml#post2098224
- https://www.citehr.com/440537-gratui...ml#post1993632
- https://www.citehr.com/337506-can-gr...ml#post2162288
- https://www.citehr.com/517210-gratui...ml#post2402006
- https://www.citehr.com/440537-gratui...-10-a-pg2.html
- https://www.citehr.com/440537-gratui...ml#post1993632
Thank you.
From India, Bangalore
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Eligibility for gratuity payment for those who have served less than 5 years of "continuous service" has been discussed repeatedly in this forum. Many establishments have accepted and paid gratuity based on the Madras High Court judgment, which concluded that 4 years and 240 days in the 5th year would meet the eligibility criteria. However, others have raised doubts about whether the Madras HC judgment automatically applies to other states, as there has been no clear amendment to the Act specifying a "5-year" requirement. This debate persists even though the Honorable Supreme Court has also confirmed that 4 years plus 240 days in the 5th year meets the eligibility criteria in the case of "LALAPPA LINGAPPA & ORS V. LAXMI VISHNU TEXTILE MILLS LTD., SHOLAPUR [1981] RD-SC 29 (11 February 1981)".
I believe it is appropriate to state that the contents of this judgment are applicable not only to the state of Maharashtra, where the cause of action originated, but to the entire nation as per the Constitution of India. In addition to this Supreme Court judgment, another SC judgment upholding the 4 years + 240 days norm for determining "continuous service" is also available, which I referenced in this column a few years ago and will repost shortly.
I may quote excerpts from the cited SC judgment as follows (it is lengthy to reproduce here but worth the space and time taken to remove lingering doubts):
"The significance of this legislation lies in the acceptance of the principle of gratuity as a compulsory, statutory retiral benefit. For a proper appreciation of the question involved, it is necessary to set out the relevant provisions of the Act. Sub-section (1) of s. 4 reads as follows: 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..."
References:
- https://www.citehr.com/473683-gratui...ml#post2098224
- https://www.citehr.com/440537-gratui...ml#post1993632
- https://www.citehr.com/337506-can-gr...ml#post2162288
- https://www.citehr.com/517210-gratui...ml#post2402006
- https://www.citehr.com/440537-gratui...-10-a-pg2.html
- https://www.citehr.com/440537-gratui...ml#post1993632
Thank you.
From India, Bangalore
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Dear Prof. Kumar,
This will probably be my last post on Gratuity. It is very incorrect to say that for the payment of gratuity, the Honorable SC also held that 4 years + 240 days in the 5th year for determining 'continuous service' meets the eligibility criteria in the case of "LALAPPA LINGAPPA & ORS V. LAXMI VISHNU TEXTILE MILLS LTD., SHOLAPUR [1981] RD-SC 29 (11 February 1981)".
This matter does not pertain to the Payment of Gratuity Act, which is an independent enactment under Social Security. How do the Madras HC (1998) and Kerala HC (2015) entertain the applications when there is an SC judgment (1981)?
If any employer is considering gratuity for 4 years and 240 days in the fifth year or even for lesser service than this, I have no objection. But that is not the law. The law is what is stated in the POG Act, which has not yet been amended based on the interpretation by the HC at the judicature in Chennai and Kerala.
I am sorry to have this kind of conversation with you. I even respect the judgments by the HC at the judicature in Chennai and Kerala, as I mentioned earlier.
With this, I conclude this topic for myself and for those whom I advise.
From India, Mumbai
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This will probably be my last post on Gratuity. It is very incorrect to say that for the payment of gratuity, the Honorable SC also held that 4 years + 240 days in the 5th year for determining 'continuous service' meets the eligibility criteria in the case of "LALAPPA LINGAPPA & ORS V. LAXMI VISHNU TEXTILE MILLS LTD., SHOLAPUR [1981] RD-SC 29 (11 February 1981)".
This matter does not pertain to the Payment of Gratuity Act, which is an independent enactment under Social Security. How do the Madras HC (1998) and Kerala HC (2015) entertain the applications when there is an SC judgment (1981)?
If any employer is considering gratuity for 4 years and 240 days in the fifth year or even for lesser service than this, I have no objection. But that is not the law. The law is what is stated in the POG Act, which has not yet been amended based on the interpretation by the HC at the judicature in Chennai and Kerala.
I am sorry to have this kind of conversation with you. I even respect the judgments by the HC at the judicature in Chennai and Kerala, as I mentioned earlier.
With this, I conclude this topic for myself and for those whom I advise.
From India, Mumbai
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Dear friends,
I believe this thread is now filled with detailed interpretations from members, which, in my opinion, does not serve the intended purpose. The original poster did not receive a definitive reply. The poster is seeking clarification on the eligibility for gratuity payment after completing 4 years and 183 days of service. In one part of the post, the poster acknowledges that their company has mentioned ineligibility for gratuity payment due to not meeting the eligibility criteria.
A clear one-line answer was provided in response to their second query.
From India, Aizawl
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I believe this thread is now filled with detailed interpretations from members, which, in my opinion, does not serve the intended purpose. The original poster did not receive a definitive reply. The poster is seeking clarification on the eligibility for gratuity payment after completing 4 years and 183 days of service. In one part of the post, the poster acknowledges that their company has mentioned ineligibility for gratuity payment due to not meeting the eligibility criteria.
A clear one-line answer was provided in response to their second query.
From India, Aizawl
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Dear friends,
The PG Act and the Rules made thereunder, when read together, should clear the air. Please read the highlighted portions of Rules-Form-U on pages 26 and 27 (attached in full). I don't think any more explanatory notes would be needed.
From India, Bangalore
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The PG Act and the Rules made thereunder, when read together, should clear the air. Please read the highlighted portions of Rules-Form-U on pages 26 and 27 (attached in full). I don't think any more explanatory notes would be needed.
From India, Bangalore
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Dear friend, Service of 4 yrs & 183 days, beyond doubt, not eligible. This has been opined by many of our members. No ambiguity. What’s still continuing is, as you know, 4+240 days.
From India, Bangalore
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From India, Bangalore
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Hi Mercury2007,
From the discussion, what I understand is that you had been working in an IT firm. If the firm had a working duration of less than 6 days in a week, like, for example, having Saturday and Sunday off, this could put the eligibility period at 4 years and 190 calendar days. If not, it should be as per the usual duration of 4 years and 240 days.
In either case, I believe it is clear that you would not be eligible for the gratuity payment. As for the gratuity provision that had been part of the CTC stack, I do not see any way to get this paid out to you.
From India, Bengaluru
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From the discussion, what I understand is that you had been working in an IT firm. If the firm had a working duration of less than 6 days in a week, like, for example, having Saturday and Sunday off, this could put the eligibility period at 4 years and 190 calendar days. If not, it should be as per the usual duration of 4 years and 240 days.
In either case, I believe it is clear that you would not be eligible for the gratuity payment. As for the gratuity provision that had been part of the CTC stack, I do not see any way to get this paid out to you.
From India, Bengaluru
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Dear Prof. Kumar,
Thanks for quoting the Lalappa Lingappa case. I mistakenly taken it as Surendra Kumar Varma case and said that this matter is not pertaining to Payment of Gratuity Act. I am sorry for that.
But, the Lalappa Lingappa case reminded me that the definition of ‘continuous service’ was introduced by insertion of an independent section 2A by way of amendment in 1984 effective from 1981 which was following this case of Lallappa Ligganppa only.
I remember this and therefore made further study when came across one thread on this forum only in which Adv. Keshav Kogaonkar from Mumbai interacted on same subject and his interaction was appreciated by our senior member none other than Umakanthan Sir and KK!HR who is one of the most appreciated members & Super Moderator at this forum.
The said thread is given in the link below:
https://www.citehr.com/591113-what-m...tuity-act.html
According to me the concept of Gratuity for long service has not been given complete go-bye, but provision has been made to pay the gratuity to those who are in service for five years and more.
I would like like to draw your attention to the judgement of H'ble SC in Straw Board Mfg. Co. 1977 II (LLJ 463).
It was observed by H’ble SC in this case that the sense of national consciousness is reflected in Gratuity Act which fixes the period of 5 years as the qualifying year for earning gratuity.
The concept of gratuity was initially to be gratuitous payment for long and meritorious service rendered by the employee in an organisation. The qualifying length was reduced to 5 years and the law was enacted in 1972.
In fact I had decided not to contribute any more on this subject. But since I made a mistake in reading Lalappa Lingappa case as Surendra Kumar Varma case, I thought of posting it.
Many learned professionals though they do not contribute here on CiteHR but read it, which I know. To them message should not go wrong. This is the purpose of this post.
From India, Mumbai
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Thanks for quoting the Lalappa Lingappa case. I mistakenly taken it as Surendra Kumar Varma case and said that this matter is not pertaining to Payment of Gratuity Act. I am sorry for that.
But, the Lalappa Lingappa case reminded me that the definition of ‘continuous service’ was introduced by insertion of an independent section 2A by way of amendment in 1984 effective from 1981 which was following this case of Lallappa Ligganppa only.
I remember this and therefore made further study when came across one thread on this forum only in which Adv. Keshav Kogaonkar from Mumbai interacted on same subject and his interaction was appreciated by our senior member none other than Umakanthan Sir and KK!HR who is one of the most appreciated members & Super Moderator at this forum.
The said thread is given in the link below:
https://www.citehr.com/591113-what-m...tuity-act.html
According to me the concept of Gratuity for long service has not been given complete go-bye, but provision has been made to pay the gratuity to those who are in service for five years and more.
I would like like to draw your attention to the judgement of H'ble SC in Straw Board Mfg. Co. 1977 II (LLJ 463).
It was observed by H’ble SC in this case that the sense of national consciousness is reflected in Gratuity Act which fixes the period of 5 years as the qualifying year for earning gratuity.
The concept of gratuity was initially to be gratuitous payment for long and meritorious service rendered by the employee in an organisation. The qualifying length was reduced to 5 years and the law was enacted in 1972.
In fact I had decided not to contribute any more on this subject. But since I made a mistake in reading Lalappa Lingappa case as Surendra Kumar Varma case, I thought of posting it.
Many learned professionals though they do not contribute here on CiteHR but read it, which I know. To them message should not go wrong. This is the purpose of this post.
From India, Mumbai
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Less than 5 years service - Eligibility for payment of gratuity.pdf