Dear Sir,
I have 2 queries regarding the Gratuity Act.
1. As per the Payment of Gratuity Act, 1972, an employee becomes eligible for gratuity when he has completed continuous five years of service. My doubt is whether he has to complete 240 working days in each year or if it is only for the 5th year that he needs to continue working for 240 days for eligibility.
2. Are paid leaves, Sundays (in the case of a 6-day workweek), Saturdays, Sundays (in the case of a 5-day workweek), and National Holidays also counted as working days for the calculation of the required 240 working days?
Thanks & Regards
From India, Delhi
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I have 2 queries regarding the Gratuity Act.
1. As per the Payment of Gratuity Act, 1972, an employee becomes eligible for gratuity when he has completed continuous five years of service. My doubt is whether he has to complete 240 working days in each year or if it is only for the 5th year that he needs to continue working for 240 days for eligibility.
2. Are paid leaves, Sundays (in the case of a 6-day workweek), Saturdays, Sundays (in the case of a 5-day workweek), and National Holidays also counted as working days for the calculation of the required 240 working days?
Thanks & Regards
From India, Delhi
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Hi,
As per the Act, it says 4 years of continuous service and 240 days of working in the 5th Year. In the Act, it is clearly mentioned about the continuous service - If he has been on leave with full wages (Leave should be taken into consideration).
Regarding the 240 days, if you are working 5 days a week, the calculation is as follows: 365 days in a year - 52 weekly offs (Sat & Sun) - 11 national holidays/festival holidays = 302 total working days in that year. Therefore, the person has to work for 240 days in the 5th year (which includes Leave + National/Festival holidays declared by the Organization).
In the Gratuity Act 1972, continuous service has conditions such as - for accidents while on duty and for females on maternity leave to be considered as continuous service.
From United Kingdom, London
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198As per the Act, it says 4 years of continuous service and 240 days of working in the 5th Year. In the Act, it is clearly mentioned about the continuous service - If he has been on leave with full wages (Leave should be taken into consideration).
Regarding the 240 days, if you are working 5 days a week, the calculation is as follows: 365 days in a year - 52 weekly offs (Sat & Sun) - 11 national holidays/festival holidays = 302 total working days in that year. Therefore, the person has to work for 240 days in the 5th year (which includes Leave + National/Festival holidays declared by the Organization).
In the Gratuity Act 1972, continuous service has conditions such as - for accidents while on duty and for females on maternity leave to be considered as continuous service.
From United Kingdom, London
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As per the Act, it is not 4 years and 240 days in the fifth year, but it is completion of 5 years of continuous service.
Now coming to continuous service, 240 days of working is considered as continuous service and that is required in each year, not just in the fifth year. The year is taken as 12 months preceding the day of exit. That means if you leave in August, your service backlogs will be counted. For deciding whether an employee had worked for 240 days, all paid holidays, weekly off days, leave days, and days on which he had been laid off will be counted as days worked. For persons in establishments which work for less than 6 days in a week, the mandatory 240 days will become 190 days. This is applicable for those who are working below the ground (of mine).
There have been a lot of discussions and disputes regarding the gratuity eligibility of employees who leave organizations after working for four years and 240 days in the fifth year. Though some judgments say that completion of 5 years is mandatory for eligibility for gratuity, some other judgments, like that of Mettur Beardsell Ltd vs Regional Labour Commissioner (1998 LLR 1072) and a very recent judgment by the Kerala High Court in Sreeja Vs Regional Joint Labour Commissioner (2015 LLR 826), have taken the stand that working for 240 days over a period of 12 months would constitute continuous service for that period. Therefore, even if an employee has not completed 5 years of service but has worked for 4 years (with each year having 240 days) and 240 days in the fifth year, they are entitled to gratuity.
Madhu.T.K
From India, Kannur
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Now coming to continuous service, 240 days of working is considered as continuous service and that is required in each year, not just in the fifth year. The year is taken as 12 months preceding the day of exit. That means if you leave in August, your service backlogs will be counted. For deciding whether an employee had worked for 240 days, all paid holidays, weekly off days, leave days, and days on which he had been laid off will be counted as days worked. For persons in establishments which work for less than 6 days in a week, the mandatory 240 days will become 190 days. This is applicable for those who are working below the ground (of mine).
There have been a lot of discussions and disputes regarding the gratuity eligibility of employees who leave organizations after working for four years and 240 days in the fifth year. Though some judgments say that completion of 5 years is mandatory for eligibility for gratuity, some other judgments, like that of Mettur Beardsell Ltd vs Regional Labour Commissioner (1998 LLR 1072) and a very recent judgment by the Kerala High Court in Sreeja Vs Regional Joint Labour Commissioner (2015 LLR 826), have taken the stand that working for 240 days over a period of 12 months would constitute continuous service for that period. Therefore, even if an employee has not completed 5 years of service but has worked for 4 years (with each year having 240 days) and 240 days in the fifth year, they are entitled to gratuity.
Madhu.T.K
From India, Kannur
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Dear Madhu ji,
Thanks for your inputs.
I am considering 12 months from the date of joining and not from the date of exit. I do not know what is correct.
I would like to add here. This may be applied in the state of Tamil Nadu and now in Kerala. Rest, one has to make a similar case law if the employer is not agreeing. Hope you will agree with me.
From India, Mumbai
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Thanks for your inputs.
I am considering 12 months from the date of joining and not from the date of exit. I do not know what is correct.
I would like to add here. This may be applied in the state of Tamil Nadu and now in Kerala. Rest, one has to make a similar case law if the employer is not agreeing. Hope you will agree with me.
From India, Mumbai
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Two ways can be followed. The only thing is that it is not the calendar year that should be followed but 12 months backward from the date of exit or 12 months from the date of joining.
There is nothing wrong in considering a state ruling from another. Similarly, a High Court ruling can be considered in another state as well. In the case of payment of Gratuity, since there was no amendment that took place in the Act considering these judgments, other states may argue that the ruling is not binding on them. There can be different interpretations of it by other judges. Even an employer can interpret the Act in the same way in which the Tamil Nadu or Kerala High Court has interpreted.
Madhu.T.K
From India, Kannur
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There is nothing wrong in considering a state ruling from another. Similarly, a High Court ruling can be considered in another state as well. In the case of payment of Gratuity, since there was no amendment that took place in the Act considering these judgments, other states may argue that the ruling is not binding on them. There can be different interpretations of it by other judges. Even an employer can interpret the Act in the same way in which the Tamil Nadu or Kerala High Court has interpreted.
Madhu.T.K
From India, Kannur
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