Hi,
I joined one organisation in Bangalore (Karnataka) on 5th November 2018 as a CONTRACT hire / CONSULTATION for 3 months. On completion of around 2 months they gave me an EMPLOYEE OFFER and I joined as an employee in the same organisation on 1st Jan 2019. I just resigned from the company few days back (15 Nov 2023) and my last working day is probably going to be 31st Oct 2023. Will I be eligible for GRATUITY? Here are more details
A) My company is in Bangalore (karnataka)
B) I work in a software company and we have 5 days a week work
C) CONTRACT hire : Offer given from 5th Nov 2018 to 4th Feb 2019 and they gave me EMPLOYEE offer from 1st Jan 2019 without waiting for CONTRACT hire to expire.
D) EMPLOYEE : 1st Jan 2019 till now and I have just resigned few days back and most probably my last working day will be 31st Oct 2023.
My queries are as under
1. Will I be eligible for gratuity? If I take 31st Oct 2023 as my last date and ignore my CONTRACT HIRE which was from 5 NOV, then from 1st Jan 2023 to 31st Oct 2023 I would have worked 4 years 304 days.
2. Many are giving Madras High Court ruling of 240 days, will it apply in Karnataka also? Has Supreme Court also said the same? Can I get any judgement proof applicable to Karnatake where someone was granted gratuity based on 240 day criteria?
3. What are my options if they plainly deny my gratuity request saying you haven't completed 5 years?
Thanks
Sujit
From India, Pune
I joined one organisation in Bangalore (Karnataka) on 5th November 2018 as a CONTRACT hire / CONSULTATION for 3 months. On completion of around 2 months they gave me an EMPLOYEE OFFER and I joined as an employee in the same organisation on 1st Jan 2019. I just resigned from the company few days back (15 Nov 2023) and my last working day is probably going to be 31st Oct 2023. Will I be eligible for GRATUITY? Here are more details
A) My company is in Bangalore (karnataka)
B) I work in a software company and we have 5 days a week work
C) CONTRACT hire : Offer given from 5th Nov 2018 to 4th Feb 2019 and they gave me EMPLOYEE offer from 1st Jan 2019 without waiting for CONTRACT hire to expire.
D) EMPLOYEE : 1st Jan 2019 till now and I have just resigned few days back and most probably my last working day will be 31st Oct 2023.
My queries are as under
1. Will I be eligible for gratuity? If I take 31st Oct 2023 as my last date and ignore my CONTRACT HIRE which was from 5 NOV, then from 1st Jan 2023 to 31st Oct 2023 I would have worked 4 years 304 days.
2. Many are giving Madras High Court ruling of 240 days, will it apply in Karnataka also? Has Supreme Court also said the same? Can I get any judgement proof applicable to Karnatake where someone was granted gratuity based on 240 day criteria?
3. What are my options if they plainly deny my gratuity request saying you haven't completed 5 years?
Thanks
Sujit
From India, Pune
If your employer strictly follow the Payment of Gratuity Act, you will fall short of a few days, say four days, if you get relieved on 31st October. This is on the basis of your actual joining on 5th November and ignoring that your service were regularised wef 1st Jan 2019.
There are no Supreme Court ruling which says that 240 days in fifth year would constitute one year of service though there are two High Court verdicts from madras and Kerala. Both these verdicts have interpreted the continuous service to mean 240 days even though the Act is very specific that completion of five years is mandatory for eligibility for gratuity of which each year should have at least 240 days if working above the ground or organisations following six days working and 190 days for those working below the ground of a mine and those following five days, a week. These 240/ 190 days re immaterial for employees who are monthly paid which shall include paid weekly offs.
If your employer is convinced that the dictum of the verdicts shall apply to Karnataka also, then he will release your gratuity and if they say that the Act can not be interpreted in the same way in which the Kerala and Madras High Courts have interpreted, you will have to question it legally. It is upto you to decide.
If you "have 'just' resigned from the company few days back (15 Nov 2023)" (?), then just forget it and just join the new company.
From India, Kannur
4246There are no Supreme Court ruling which says that 240 days in fifth year would constitute one year of service though there are two High Court verdicts from madras and Kerala. Both these verdicts have interpreted the continuous service to mean 240 days even though the Act is very specific that completion of five years is mandatory for eligibility for gratuity of which each year should have at least 240 days if working above the ground or organisations following six days working and 190 days for those working below the ground of a mine and those following five days, a week. These 240/ 190 days re immaterial for employees who are monthly paid which shall include paid weekly offs.
If your employer is convinced that the dictum of the verdicts shall apply to Karnataka also, then he will release your gratuity and if they say that the Act can not be interpreted in the same way in which the Kerala and Madras High Courts have interpreted, you will have to question it legally. It is upto you to decide.
If you "have 'just' resigned from the company few days back (15 Nov 2023)" (?), then just forget it and just join the new company.
From India, Kannur
Hi Madhu,
Thanks for the information. Looks like you are suggesting I would have to forfeit my gratuity which I would not like as the amount is big and you may be knowing in software this gratuity amount was getting deducted every month and it was part of my CTC.
I contacted few lawyers and they clearly told me 240 days is what stand as of now and they said if organisation denies it I can file an appeal with Labor commissioner.
Considering your experience as HR, do you know of any case in Karnataka / Bangalore where an employee got gratuity when period of service was less than 5 year but more than 4 year 240 days? If yes, did they got it after filing a case?
Some of the links I found (there are many but giving just few). I understand Supreme Court ruling is for all over India and High Court ruling is for specific state but every state gives respect to other states high court judgements. I wonder why such a case has not come to Karnataka High Court, or do you know any?
https://www.linkedin.com/pulse/employee-benefits-india-payment-gratuity-what-himachali-gphr/
https://www.linkedin.com/pulse/gratuity-required-complete-5-years-continuous-service-rahul-kumar/
I downloaded PDF of GRATUITY ACT and I see mention of "two hundred and forty days"
https://clc.gov.in/clc/sites/default/files/PaymentofGratuityAct.pdf
Thanks
Sujit
From India, Pune
Thanks for the information. Looks like you are suggesting I would have to forfeit my gratuity which I would not like as the amount is big and you may be knowing in software this gratuity amount was getting deducted every month and it was part of my CTC.
I contacted few lawyers and they clearly told me 240 days is what stand as of now and they said if organisation denies it I can file an appeal with Labor commissioner.
Considering your experience as HR, do you know of any case in Karnataka / Bangalore where an employee got gratuity when period of service was less than 5 year but more than 4 year 240 days? If yes, did they got it after filing a case?
Some of the links I found (there are many but giving just few). I understand Supreme Court ruling is for all over India and High Court ruling is for specific state but every state gives respect to other states high court judgements. I wonder why such a case has not come to Karnataka High Court, or do you know any?
https://www.linkedin.com/pulse/employee-benefits-india-payment-gratuity-what-himachali-gphr/
https://www.linkedin.com/pulse/gratuity-required-complete-5-years-continuous-service-rahul-kumar/
I downloaded PDF of GRATUITY ACT and I see mention of "two hundred and forty days"
https://clc.gov.in/clc/sites/default/files/PaymentofGratuityAct.pdf
Thanks
Sujit
From India, Pune
I know that the IT professionals get pretty large amount as salary but the gratuity qualifying salary would be the least! I also know that no IT company would DEDUCT the gratuity from the salary every month yet it shall be marked as part of CTC. CTC has no legal sanctity and it shall include any amount which the company may cost by employing you. Therefore, it shall include future costs. The offer letter will have a condition for such payments, like, for gratuity it shall be " payable as per law in force". If the law says you can get it for your service less than 5 years, you can get it and if the law is amended to make it payable after ten years, you will lose it.
Now coming to the companies which have offered gratuity to employees who have worked for less than five years, I would say that such companies have considered only the basic salary for calculation of gratuity. Many IT companies and also companies where collective bargaining is not present or at least in respect of employees who do not get their salary revised in a settlement with bargaining agents, trade Unions, have salary structure with the least amount as basic salary and very huge amounts in 'other allowances' to defeat the law which says that 'allowance' do not qualify for gratuity. Though there are different views about treatment of allowances, the general tendency is to take basic salary and dearness allowance alone. Unfortunately, these new generation companies do not pay dearness allowance but end up in calculating the gratuity on basic salary which they fix as a component of total remuneration, ie, salary.
As observed by you, the verdicts of Hon High Courts need not be followed unlike a Supreme Court verdict. Still, the Labour Commissioner (the Controlling authority for payment of Gratuity need not necessarily be the Labour Commissioner but an Asst. Labour Commissioner) can cite these High Court judgments and make a finding of his own based on the situation.
Now my recommendation to leave the issue is just practical. If you want to fight for it you can file a complaint before the controlling authority. If your company has offices in other states, then the Asst Labour Commissioner (Central) is the appropriate authority whereas if you have office only in Karnataka, then the Officer of the state Labour department is the authority. Before filing a complaint, please send a letter to the employer (in form I).
You may calculate the gratuity based on the basic salary that you get now. As already pointed out, it is a question of law whether the amount of gratuity is to be calculated on the basic salary alone or on the gross salary. Anyway, I am of the opinion that it should be on gross salary which are considered for deduction of loss of pay when an employee takes a leave without pay. ( I cannot elaborate it much because myself is fighting a case on the same and the proceedings is in the evidence stage only, Sorry for that...!)
Madhu T K
From India, Kannur
Now coming to the companies which have offered gratuity to employees who have worked for less than five years, I would say that such companies have considered only the basic salary for calculation of gratuity. Many IT companies and also companies where collective bargaining is not present or at least in respect of employees who do not get their salary revised in a settlement with bargaining agents, trade Unions, have salary structure with the least amount as basic salary and very huge amounts in 'other allowances' to defeat the law which says that 'allowance' do not qualify for gratuity. Though there are different views about treatment of allowances, the general tendency is to take basic salary and dearness allowance alone. Unfortunately, these new generation companies do not pay dearness allowance but end up in calculating the gratuity on basic salary which they fix as a component of total remuneration, ie, salary.
As observed by you, the verdicts of Hon High Courts need not be followed unlike a Supreme Court verdict. Still, the Labour Commissioner (the Controlling authority for payment of Gratuity need not necessarily be the Labour Commissioner but an Asst. Labour Commissioner) can cite these High Court judgments and make a finding of his own based on the situation.
Now my recommendation to leave the issue is just practical. If you want to fight for it you can file a complaint before the controlling authority. If your company has offices in other states, then the Asst Labour Commissioner (Central) is the appropriate authority whereas if you have office only in Karnataka, then the Officer of the state Labour department is the authority. Before filing a complaint, please send a letter to the employer (in form I).
You may calculate the gratuity based on the basic salary that you get now. As already pointed out, it is a question of law whether the amount of gratuity is to be calculated on the basic salary alone or on the gross salary. Anyway, I am of the opinion that it should be on gross salary which are considered for deduction of loss of pay when an employee takes a leave without pay. ( I cannot elaborate it much because myself is fighting a case on the same and the proceedings is in the evidence stage only, Sorry for that...!)
Madhu T K
From India, Kannur
Dear Mr Sujit,
Though Mr Madhu T.K. has explained in detail about the Gratuity Act and its applicability.
I would like to add few points which may be helpful:-
1. The concept of 240 days (which you have mentioned regarding Gratuity Act) is related to count that year as full year (uninterrupted Service). That means if the employees work for 240 till end of the year than olny that year will be counted as 01 year. But as per the Act that is applicable only when the circle of 365 days completed in the year (period). That doesn’t mean only after completing 240 days it will treated as 01 year.
2. It is true in various cases gratuity is allowed by courts (even the Labour Office also denotes the verdicts in their hearings). But the Act is not Amended so far, so as per the Gratuity Act there should be 05 years uninterrupted service. No such decision is given by Supreme Court.
3. As suggested by Mr Madhu, you can also fight you’re your emoluments in which the said references can be produced as valid document/s.
From India, Delhi
Though Mr Madhu T.K. has explained in detail about the Gratuity Act and its applicability.
I would like to add few points which may be helpful:-
1. The concept of 240 days (which you have mentioned regarding Gratuity Act) is related to count that year as full year (uninterrupted Service). That means if the employees work for 240 till end of the year than olny that year will be counted as 01 year. But as per the Act that is applicable only when the circle of 365 days completed in the year (period). That doesn’t mean only after completing 240 days it will treated as 01 year.
2. It is true in various cases gratuity is allowed by courts (even the Labour Office also denotes the verdicts in their hearings). But the Act is not Amended so far, so as per the Gratuity Act there should be 05 years uninterrupted service. No such decision is given by Supreme Court.
3. As suggested by Mr Madhu, you can also fight you’re your emoluments in which the said references can be produced as valid document/s.
From India, Delhi
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Circular No_04_2016 Payment of Gratuity to the No Work No Pay System workers under Payment of Gr.pdf
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