I completed 4 years and 8 months on 5 August in my current company, and I plan to move out seeking new ventures. However, my appointment letter does not state any gratuity benefits. Therefore, my questions are:
1) Will I be entitled to receive gratuity after completing 4 years and 8 months?
2) If my appointment letter does not mention any gratuity payouts, will I still be able to receive the gratuity amount based on the Gratuity Act?
Your response would be highly appreciated.
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71) Will I be entitled to receive gratuity after completing 4 years and 8 months?
2) If my appointment letter does not mention any gratuity payouts, will I still be able to receive the gratuity amount based on the Gratuity Act?
Your response would be highly appreciated.
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what does your company policy or HR manual say about Gratuity?
From India, Delhi
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From India, Delhi
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Whether your appointment order mentions gratuity or not does not matter. If the company has more than 10 employees, it would generally fall under the provisions of the Payment of Gratuity Act. Four years and eight months of service may not make you eligible for gratuity as the act prescribes five years of continuous service.
From India, Pune
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From India, Pune
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Mr. Rahul: There is no such policy, HR manual, or HR booklet in my company.
Mr. Nathrao: Earlier today, I spoke to one of my ex-HR Managers who informed me that 8 months is calculated as 1 year in the Gratuity Act. So, if an employee works for 4 years and 8 months, he would still be eligible for Gratuity.
Since I was not sure about this, I have used this forum so that experienced professionals can help me in making a decision.
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Mr. Nathrao: Earlier today, I spoke to one of my ex-HR Managers who informed me that 8 months is calculated as 1 year in the Gratuity Act. So, if an employee works for 4 years and 8 months, he would still be eligible for Gratuity.
Since I was not sure about this, I have used this forum so that experienced professionals can help me in making a decision.
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Please refer attachment. Will be of great ise to you. There are many posts on the same
From India, Chennai
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From India, Chennai
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Dear Aniskhane,
If payment of gratuity is mentioned or not mentioned in the appointment order, it is irrespective. You will be eligible for gratuity. The Payment of Gratuity (Second Amendment) Act, 1984 clarifies that if an employee completes 4 years and 8 months of service with more than 10 employees in that organization, they will be eligible for gratuity. i.e., 240 days = 1 year where the company follows a 5-day workweek.
The formula for gratuity is as follows: Payment of Gratuity = Basic salary * Number of years of service * 15/26.
Hope this may help you. Seniors, please correct me if I am wrong.
Thank you
From India, Hyderabad
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If payment of gratuity is mentioned or not mentioned in the appointment order, it is irrespective. You will be eligible for gratuity. The Payment of Gratuity (Second Amendment) Act, 1984 clarifies that if an employee completes 4 years and 8 months of service with more than 10 employees in that organization, they will be eligible for gratuity. i.e., 240 days = 1 year where the company follows a 5-day workweek.
The formula for gratuity is as follows: Payment of Gratuity = Basic salary * Number of years of service * 15/26.
Hope this may help you. Seniors, please correct me if I am wrong.
Thank you
From India, Hyderabad
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Dear Uma Maley,
The basic condition for qualifying gratuity payment under the act is still 5 years of continuous service. However, in order to count 01 year of continuous (uninterrupted) service, the below is used:
In the case of an employee who is not in uninterrupted service for one year, he shall be deemed to be in continuous service if he has been actually employed by an employer during the twelve months immediately preceding the year for not less than:
(i) 190 days, if employed below the ground in a mine, or
(ii) 240 days, in any other case, except when he is employed in a seasonal establishment.
Please note that the 240 days (generally referred to as 08 months) has been taken on the basis of Point (i), which initially reformed to count 01 year of service for the mid-period (1st to 4th year of service). This means if an employee works for 240 or more days in a service year, then it will be counted as 01 year. That does not mean 240 days will be equal to the 5th year. First, the employee needs to complete the 5th year, and only then can the 240 days grace be taken. This is my opinion based on the language drafted in the Act.
However, there are cases (court verdicts) where employees received gratuity for 4 years and 08 months of service, but still, there is no amendment in the basic Act that shows the eligible period as 4 years 08 months. Hence, in the first instance, the company (employer) can deny paying the gratuity for less than 5 years of service. But if the employee takes the case to court and the lawyer provides examples of previous court verdicts, the court may direct the employer to pay the gratuity.
There have been many discussions on this topic, and it remains a significant topic for HR professionals. I hope my points are clear. Fellow members can shed more light or correct me.
From India, Delhi
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The basic condition for qualifying gratuity payment under the act is still 5 years of continuous service. However, in order to count 01 year of continuous (uninterrupted) service, the below is used:
In the case of an employee who is not in uninterrupted service for one year, he shall be deemed to be in continuous service if he has been actually employed by an employer during the twelve months immediately preceding the year for not less than:
(i) 190 days, if employed below the ground in a mine, or
(ii) 240 days, in any other case, except when he is employed in a seasonal establishment.
Please note that the 240 days (generally referred to as 08 months) has been taken on the basis of Point (i), which initially reformed to count 01 year of service for the mid-period (1st to 4th year of service). This means if an employee works for 240 or more days in a service year, then it will be counted as 01 year. That does not mean 240 days will be equal to the 5th year. First, the employee needs to complete the 5th year, and only then can the 240 days grace be taken. This is my opinion based on the language drafted in the Act.
However, there are cases (court verdicts) where employees received gratuity for 4 years and 08 months of service, but still, there is no amendment in the basic Act that shows the eligible period as 4 years 08 months. Hence, in the first instance, the company (employer) can deny paying the gratuity for less than 5 years of service. But if the employee takes the case to court and the lawyer provides examples of previous court verdicts, the court may direct the employer to pay the gratuity.
There have been many discussions on this topic, and it remains a significant topic for HR professionals. I hope my points are clear. Fellow members can shed more light or correct me.
From India, Delhi
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Uma Maley had mentioned that as per the 1984 amendment, the eligibility period is 4 years and 8 months. Would you please share the text of the amendment? Kindly read Section 4 and Section 2A of the Payment of Gratuity Act 1972 before making comments.
Appreciations to Pan Singh Dangwal for the clarification.
From India, Madras
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Appreciations to Pan Singh Dangwal for the clarification.
From India, Madras
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