Dear All,
In case of 6 years 7 months 8 days of service, should we round off to 7 years of service for the calculation of Gratuity? This question has been discussed in past posts on the site, but I would like to clarify the following:
1) Does the 240-day condition apply after the completion of 5 years of service?
2) Does the 240-day condition apply only for the initial 5 years?
3) Could you please provide the related section in the PG Act, 1972?
4) Are there any relevant cases from the past that we should consider?
J S Malik Sir, could you kindly share your views on this matter?
Thanks,
Hitesh
From India, Gandhinagar
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1In case of 6 years 7 months 8 days of service, should we round off to 7 years of service for the calculation of Gratuity? This question has been discussed in past posts on the site, but I would like to clarify the following:
1) Does the 240-day condition apply after the completion of 5 years of service?
2) Does the 240-day condition apply only for the initial 5 years?
3) Could you please provide the related section in the PG Act, 1972?
4) Are there any relevant cases from the past that we should consider?
J S Malik Sir, could you kindly share your views on this matter?
Thanks,
Hitesh
From India, Gandhinagar
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Dear Mr. Hitesh,
Kindly see Section 4, subsection 2 of the Gratuity Act as follows:
" 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."
Accordingly, service of more than 6 months will be treated as one year for gratuity calculation. 240 days per year is the minimum eligibility (first 5 years).
Abbas.P.S
From India, Bangalore
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Kindly see Section 4, subsection 2 of the Gratuity Act as follows:
" 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."
Accordingly, service of more than 6 months will be treated as one year for gratuity calculation. 240 days per year is the minimum eligibility (first 5 years).
Abbas.P.S
From India, Bangalore
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Dear Abbasiti, Thank you for your reply. I have a couple of questions:
1) If a worker has been with the establishment for 15 years, 8 months, and 10 days, and during this time, they were absent for 8 months, with a total of only 98 working days (Prescribed + Public Holidays + Paid Leaves), would they still be eligible for 16 years of gratuity?
2) If a worker initially worked as a seasonal employee for 15 years and was later made permanent, retiring after 5 years of permanent employment, making a total of 20 years of service, how would the gratuity be calculated in this case? (Based on 7 days or 15 days)
If possible, could you please advise on the relevant case name or law section pertaining to these matters?
I look forward to hearing from all the senior members regarding this important issue.
Thank you.
From India, Gandhinagar
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1) If a worker has been with the establishment for 15 years, 8 months, and 10 days, and during this time, they were absent for 8 months, with a total of only 98 working days (Prescribed + Public Holidays + Paid Leaves), would they still be eligible for 16 years of gratuity?
2) If a worker initially worked as a seasonal employee for 15 years and was later made permanent, retiring after 5 years of permanent employment, making a total of 20 years of service, how would the gratuity be calculated in this case? (Based on 7 days or 15 days)
If possible, could you please advise on the relevant case name or law section pertaining to these matters?
I look forward to hearing from all the senior members regarding this important issue.
Thank you.
From India, Gandhinagar
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ADP India recently conducted a webinar about gratuity. It is very informative, and I hope it will help you. The Gratuity Webinar is available here: [CLRA Compliance: Your Responsibility as an Employer - ADP On-Demand Webinar](http://www.adp.in/resources/webinar/everything-you-need-to-know-about-gratuity)
From India, Chennai
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From India, Chennai
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Gratuity calculation.doc
Gratuity Calculation tool.xls