Hi,
Can someone share the latest Gratuity Act (Amendment) 2011. We have a case here who is expected to get releived on 31-Oct-2012 but does not complete 5yrs but shall complete only 4yrs and 250 days...
He claims that there is a new notification...but I do not have a GO which states so...please suggest.
Thanks!
Ajay Mali
From India, Hyderabad
1Can someone share the latest Gratuity Act (Amendment) 2011. We have a case here who is expected to get releived on 31-Oct-2012 but does not complete 5yrs but shall complete only 4yrs and 250 days...
He claims that there is a new notification...but I do not have a GO which states so...please suggest.
Thanks!
Ajay Mali
From India, Hyderabad
There is no such amendment to Payment of Gratuity Act which provides that an employee who has not completed 5 years but has completed 4 years and 250 days (in fact it may be 240 days) should be given gratuity. There are some court verdicts like the one by Madras High Court (Metur Bearsell case) which directs the employer to pay gratuity to an employee who has put in service of 4 years and 240 days in the fifth year.
The concept of 240 days has been given in the Act as a formula to decide whether a year of service of an employee should be taken as countable for gratuity and accordingly, an employee who has worked for 240 days in a year shall be deemed to have eligible service but this does not mean that an employee otherwise not eligible to gratuity should be paid it just because he has put in 240 days in each year. In Lalappa Lingappa Vs. Lakshmi Vishnu Mills the court has observed that the above said days should be worked out when an employee who is otherwise eligible to get gratuity but has in between service has break in service due to loss of pay and the court has said that any loss of pay leave for which there was no disciplinary action taken against the employee should be considered for deciding eligibility for gratuity.
A simple reading is that in respect of casual/ FTC/ temporary employees this 240 days calculation shall be applied whereas for a permanent employee the completion of five years of service is the base for eligibility for gratuity.
Regards,
Madhu.T.K
From India, Kannur
The concept of 240 days has been given in the Act as a formula to decide whether a year of service of an employee should be taken as countable for gratuity and accordingly, an employee who has worked for 240 days in a year shall be deemed to have eligible service but this does not mean that an employee otherwise not eligible to gratuity should be paid it just because he has put in 240 days in each year. In Lalappa Lingappa Vs. Lakshmi Vishnu Mills the court has observed that the above said days should be worked out when an employee who is otherwise eligible to get gratuity but has in between service has break in service due to loss of pay and the court has said that any loss of pay leave for which there was no disciplinary action taken against the employee should be considered for deciding eligibility for gratuity.
A simple reading is that in respect of casual/ FTC/ temporary employees this 240 days calculation shall be applied whereas for a permanent employee the completion of five years of service is the base for eligibility for gratuity.
Regards,
Madhu.T.K
From India, Kannur
Pl find herewith the verdict given by Madras High court in this regard.
Also check Section 2A of Gratuity Act.
[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 [11][***] 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 establishment which works for less than six days in a week; and
(ii) two hundred and forty days, in any other case;
(b) for the said period of six months, if the employee during the period of six calendar months preceding the date with reference to which the calculation is to be made, has actually worked under the employer for not less than—
(i) ninety-five days, in the case of an employee employed below the ground in a mine or in an establishment which works for less than six days in a week; and
(ii) one hundred and twenty days, in any other case.
[Explanation.—For the purposes of clause (2) the number of days on which an employee has actually worked under an employer shall include the days on which—
(i) he has been laid-off under an agreement or as permitted by standing orders made under the Industrial Employment (Standing Orders) Act, 1946 (20 of 1946), or under the Industrial Disputes Act, 1947 (14 of 1947), or under any other law applicable to the establishment;
(ii) he has been on leave with full wages, earned in the previous year;
(iii) he has been absent due to temporary disablement caused by accident arising out of and in the course of his employment; and
(iv) in the case of a female, she has been on maternity leave; so, however, that the total period such maternity leave does not exceed twelve weeks.]
(3) where 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 for such period if he has actually worked for not less than seventy five per cent, of the number of days on which the establishment was in operation during such period.]
thnx
Subrata
From India, Calcutta
Also check Section 2A of Gratuity Act.
[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 [11][***] 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 establishment which works for less than six days in a week; and
(ii) two hundred and forty days, in any other case;
(b) for the said period of six months, if the employee during the period of six calendar months preceding the date with reference to which the calculation is to be made, has actually worked under the employer for not less than—
(i) ninety-five days, in the case of an employee employed below the ground in a mine or in an establishment which works for less than six days in a week; and
(ii) one hundred and twenty days, in any other case.
[Explanation.—For the purposes of clause (2) the number of days on which an employee has actually worked under an employer shall include the days on which—
(i) he has been laid-off under an agreement or as permitted by standing orders made under the Industrial Employment (Standing Orders) Act, 1946 (20 of 1946), or under the Industrial Disputes Act, 1947 (14 of 1947), or under any other law applicable to the establishment;
(ii) he has been on leave with full wages, earned in the previous year;
(iii) he has been absent due to temporary disablement caused by accident arising out of and in the course of his employment; and
(iv) in the case of a female, she has been on maternity leave; so, however, that the total period such maternity leave does not exceed twelve weeks.]
(3) where 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 for such period if he has actually worked for not less than seventy five per cent, of the number of days on which the establishment was in operation during such period.]
thnx
Subrata
From India, Calcutta
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