Is notice period included in calculating 5 years eligibility period for gratuity?

anujcpa

Hi, I will be completing 5 years of service in my present company on Feb 16th. Will I be eligible for Gratuity, if I resign on Jan 31st and then serve the one month notice period until Feb 28th? Is notice period included in calculating 5 years eligibility period for gratuity or is it necessary that I submit my resignation only after Feb 16th i.e., after completing 5 years (before submitting resignaiton) and then serve notice period? Thank you for your help.
13th January 2009

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Madhu.T.K

4246

Notice period will be counted as service provided you work during the notice period days. The date of leaving will be the date on which the gratuity actually accrues. Therefore, if you submit resignation in January and get relieved in February, you will be eligible for gratuity. Regards, Madhu.T.K
14th January 2009 From India, Kannur

malikjs

167

dear i will advise u to submit paper after completing five years.suppose u resign on 31 jan after serving notice and your employer relieved u on same day.legally u are right ,but to be on safe side better give after completing five years. tks j s malik
14th January 2009 From India, Delhi

M.Peer Mohamed Sardhar

733

Dear Anuj Keep Suggestions by Both Madhu & Malik. Understand Your Employer. Your Employer Might relieve you on the same day for 2 Reasons 1) Long Serving Employee - Should be Given Free Hand for Career Prospects 2) Long Service Employee - Good Rapport with Colleagues, Might Take People with him. Better Understand the Employer & then Take a Decision...
14th January 2009 From India, Coimbatore

rajendra_33377

Dear Anup, greetings for the day, above frainds r right ,but according to Gratuty Act If a emoloyee work in a company for 4 year 8month(240 days) then he/she is elgible for gratuty,please ask Madhu About this. regards, Rajendra
14th January 2009 From India, New Delhi

malikjs

167

dear as per gratuity act five year minimum service required to be eligible for gatuity.in one case madras highcourt has given judgement that if someone has completed 240 days in fifth year ,he is eligible for gratuity but there is no amendment in the act. tks j s malik
14th January 2009 From India, Delhi

talhasag

Hi, It is strange to know that in India 5 years service completion is esential for Gratuity eligibility. Here in Pakistan every employee who completes one year of his service, is eligible for gratuity.......In the mentioned case notice period must be included in your job tenure Regards Sagheer Ahmed Niagara Mills Pvt Limited Faisalabad, Pakistan
14th January 2009 From Pakistan, Faisalabad

M.Peer Mohamed Sardhar

733

Labour Laws: The Payment of Graturity Act, 1972 Applicability: All Industries/Commercial Establishments who are registered under Shops & Establishment Act or Factories Act. Gratuity Formula: Last Wage Drawn Divided by 26 Multiplied by 15 and the whole multimplied by no. of years Service. Wage means whatever you are calculating ffor EPF purpose. Eligiblity: After completion of 5 years total service. (for this purpose 6 months and above can be rounded off to full years services and less than 6 months need not be.). Pl remember, for eligibility, it is after 5 year service, but for payment, from the date of joining , the period will be taken into calculation. In death case, this 5 year services is waived off that means, if an employee dies after completion of 3 year total service, his nominee is eligible to get 3 years Gratuity amount from the organisation. Employer is to take Nomination Form as per rules from the employee concerned once he completes one year service from the date of joining. Forfeiture or Deductions are allowaable from the Gratuity amount as per provisions stipulated in the Act.
14th January 2009 From India, Coimbatore

M.Peer Mohamed Sardhar

733

Payment of Gratuity Act, 1972  Provides for payment of gratuity @ 15 days' wages for every completed year of service or part thereof, in excess of seven months  Maximum amount of gratuity payable under the Act was raised from Rs. 1.00 lakh to Rs. 3.50 lakh with effect from 24.9.97  No wage ceiling for coverage under the Act Applicability

Every factory (as defined in Factories Act), mine, oilfield, plantation, port and railway.
Every shop or establishment to which Shops & Establishment Act of a State applies in which 10 or more persons are employed at any time during the year end.
Any establishment employing 10 or more persons as may be notified by the Central Government.
Once Act applies, it continues to apply even if employment strength falls below 10.

Benefits

The quantum of gratuity is to be computed at the rate of 15 days wages (7 days wages in case of seasonal establishments) based on rate of wages last drawn by the employee concerned for every completed year of service or a part thereof exceeding 6 months.
The total amount of gratuity payable shall not exceed the prescribed limit.
In case where higher benefit of gratuity is available under any gratuity scheme of the Co., the employee will be entitled to higher benefit

Calculation of Gratuity

Gratuity = Monthly Salary x 15 days x No. of yrs. of service 26
Max. Gratuity payable under the Act is Rs. 3,50,000/- (w.e.f. 24-9-1997)

Penal Provisions 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: PROVIDED that in the case of a piece rated employee, daily wages shall be computed on the average of the total wages received by him for a period of three months immediately preceding the termination of his employment, and, for this purpose, the wages paid for any overtime work shall not be taken into account: PROVIDED FURTHER that in the case of 14[an employee who is employed in a seasonal establishment and who is not so employed throughout the year], the employer shall pay the gratuity at the rate of seven days� wages for each season. Explanation : In the case of a monthly rated employee, the fifteen days� wages shall be calculated by dividing the monthly rate of wages last drawn by him by twenty-six and multiplying the quotient by fifteen. (3) The amount of gratuity payable to an employee shall not exceed 15[three lakhs and fifty thousand] rupees. (4) For the purpose of computing the gratuity payable to an employee who is employed, after his disablement, on reduced wages, his wages for the period preceding his disablement, shall be taken to be the wages received by him during that period, and his wages for the period subsequent to his disablement shall be taken to be the wages as so reduced. (5) 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. (6) Notwithstanding anything contained in sub-section (1), (a) the gratuity of an employee, whose services have been terminated for any act, wilful omission or negligence causing any damage or loss to, or destruction of, property belonging to the employer, shall be forfeited to the extent of the damage or loss so caused; (b) the gratuity payable to an employee 16[may be wholly or partially forfeited]- (i) if the services of such employee have been terminated for his riotous or disorderly conduct or any other act of violence on his part, or (ii) if the services of such employee have been terminated for any act which constitutes an offence involving moral turpitude, provided that such offence is committed by him in the course of his employment. DETERMINATION OF THE AMOUNT OF GRATUITY - (1) A person who is eligible for payment of gratuity under this Act or any person authorised, in writing, to act on his behalf shall send a written application to the employer, within such time and in such form, as may be prescribed, for payment of such gratuity. (2) As soon as gratuity becomes payable, the employer shall, whether an application referred to in sub-section (1) has been made or not, determine the amount of gratuity and give notice in writing to the person to whom the gratuity is payable and also to the controlling authority specifying the amount of gratuity so determined. (3) The employer shall arrange to pay the amount of gratuity within thirty days from the date it becomes payable to the person to whom the gratuity is payable. (3A) If the amount of gratuity payable under sub-section (3) is not paid by the employer within the period specified in sub-section (3), the employer shall pay, from the date on which the gratuity becomes payable to the date on which it is paid, simple interest at such rate, not exceeding the rate notified by the Central Government from time to time for repayment of long-term deposits, as that Government may, by notification specify : Provided that no such interest shall be payable if the delay in the payment is due to the fault of the employee and the employer has obtained permission in writing from the controlling authority for the delayed payment on this ground. (4) (a) If there is any dispute as to the amount of gratuity payable to an employee under this Act or as to the admissibility of any claim of, or in relation to, an employee for payment of gratuity, or as to the person entitled to receive the gratuity, the employer shall deposit with the controlling authority such amount as he admits to be payable by him as gratuity. (b) Where there is a dispute with regard to any matter or matters specified in clause (a), the employer or employee or any other person raising the dispute may make an application to the controlling authority for deciding the dispute. (c) The controlling authority shall, after due inquiry and after giving the parties to the dispute a reasonable opportunity of being heard, determine the matter or matters in dispute and if, as a result of such inquiry any amount is found to be payable to the employee, the controlling authority shall direct the employer to pay such amount or, as the case may be, such amount as reduced by the amount already deposited by the employer. (d) The controlling authority shall pay the amount deposited, including the excess amount, if any, deposited by the employer, to the person entitled thereto. (e) As soon as may be after a deposit is made under clause (a), the controlling authority shall pay the amount of the deposit - (i) to the applicant where he is the employee; or (ii) where the applicant is not the employee, to the nominee or, as the case may be, the guardian of such nominee or heir of the employee if the controlling authority is satisfied that there is no dispute as to the right of the applicant to receive the amount of gratuity. (5) For the purpose of conducting an inquiry under sub-section (4), the controlling authority shall have the same powers as are vested in a court, while trying a suit, under the Code of Civil Procedure, 1908 (5 of 1908), in respect of the following matters, namely :- (a) enforcing the attendance of any person or examining him on oath; (b) requiring the discovery and production of documents; (c) receiving evidence on affidavits; (d) issuing commissions for the examination of witnesses. (6) Any inquiry under this section shall be a judicial proceeding within the meaning of sections 193 and 228, and for the purpose of section 196, of the Indian Penal Code, 1860 (45 of 1860). (7) Any person aggrieved by an order under sub-section (4) may, within sixty days from the date of the receipt of the order, prefer an appeal to the appropriate Government or such other authority as may be specified by the appropriate Government in this behalf : Provided that the appropriate Government or the appellate authority, as the case may be, may, if it is satisfied that the appellant was prevented by sufficient cause from preferring the appeal within the said period of sixty days, extend the said period by a further period of sixty days. Provided further that no appeal by an employer shall be admitted unless at the time of preferring the appeal, the appellant either produces a certificate of the controlling authority to the effect that the appellant has deposited with him an amount equal to the amount of gratuity required to be deposited under sub-section (4), or deposits with the appellate authority such amount. (8) The appropriate Government or the appellate authority, as the case may be, may, after giving the parties to the appeal a reasonable opportunity of being heard, confirm, modify or reverse the decision of the controlling authority. Recovery of gratuity If the amount of gratuity payable under this Act is not paid by the employer, within the prescribed time, to the person entitled thereto, the controlling authority shall, on an application made to it in this behalf by the aggrieved person, issue a certificate for that amount to the Collector, who shall recover the same, together with compound interest thereon 26[at such rate as the Central Government may, by notification, specify], from the date of expiry of the prescribed time, as arrears of land revenue and pay the same to the person entitled thereto: PROVIDED that the controlling authority shall, before issuing a certificate under this section, give the employer a reasonable opportunity of showing cause against the issue of such certificate: PROVIDED FURTHER that the amount of interest payable under this section shall, in no case, exceed the amount of gratuity payable under this Act.]
14th January 2009 From India, Coimbatore

aparna.s

Dear All, Thanks for the valuable suggestions. Can anyone pl. let me know, if an employer can deduct some % of gratuity per month from employee's salary from the date of joining? Can an employer show gratuity as a part of CTC?? Thanks once again and awaiting the replies. Regards, APARNA
14th January 2009 From India, Delhi

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