Hi, I have worked in the organization for approximately 4.10 years (from 1.4.2016 to 8.2.2021), and the organization is refusing the eligibility of gratuity. I have reviewed various sites and know from other sources that this period falls under Gratuity benefits. Furthermore, the "Gratuity Act" itself mentions 4 years of continuous service, and the 5th year with 240 days falls under this Gratuity eligibility.
Please suggest and provide the relevant documented sources so that I can further escalate my matter with the company and other government agencies.
From India, New Delhi
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1Please suggest and provide the relevant documented sources so that I can further escalate my matter with the company and other government agencies.
From India, New Delhi
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Dear Ketan,
From 1st April 2020 to 8th February 2021, you have worked for 314 days. I hope your service was continuous, and there was no break in between. A break refers to an absence without authorization.
Have you filled out Form 1 of the Payment of Gratuity Act, 1972, and handed it over to HR? If not, I recommend that you do so. Fill out the form in two hard copies, provide one copy to HR, and obtain a seal and signature on the second one. The individuals in the HR department cannot refuse to accept the form. Request them to provide an explanation in a return reply, citing the specific clause of the Payment of Gratuity Act, 1972, under which the claim cannot be entertained.
When interacting with HR professionals, please maintain a polite demeanor. Regardless of any provocation, please do not lose your composure.
If the HR professionals decline to accept Form I, then send it via Speed Post. Subsequently, scan the second copy along with the post office receipt and forward the claim via email. Retain a printout and carefully store all correspondence.
Should you fail to receive a reply or receive a response lacking legal validity, address a letter to the Managing Director of the company. Clearly outline your eligibility for gratuity and resend the completed form.
For now, kindly follow the instructions provided. Let's observe how events transpire. Further advice will be provided subsequently.
Thank you,
Dinesh Divekar
From India, Bangalore
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From 1st April 2020 to 8th February 2021, you have worked for 314 days. I hope your service was continuous, and there was no break in between. A break refers to an absence without authorization.
Have you filled out Form 1 of the Payment of Gratuity Act, 1972, and handed it over to HR? If not, I recommend that you do so. Fill out the form in two hard copies, provide one copy to HR, and obtain a seal and signature on the second one. The individuals in the HR department cannot refuse to accept the form. Request them to provide an explanation in a return reply, citing the specific clause of the Payment of Gratuity Act, 1972, under which the claim cannot be entertained.
When interacting with HR professionals, please maintain a polite demeanor. Regardless of any provocation, please do not lose your composure.
If the HR professionals decline to accept Form I, then send it via Speed Post. Subsequently, scan the second copy along with the post office receipt and forward the claim via email. Retain a printout and carefully store all correspondence.
Should you fail to receive a reply or receive a response lacking legal validity, address a letter to the Managing Director of the company. Clearly outline your eligibility for gratuity and resend the completed form.
For now, kindly follow the instructions provided. Let's observe how events transpire. Further advice will be provided subsequently.
Thank you,
Dinesh Divekar
From India, Bangalore
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Dear Ketan,
In the first part: You can only be eligible for gratuity after 1.04.2021 because you are completing 5 years of service on that day. It also requires assessing whether all these five years are of continuous nature or not. This is the thumb rule of the Gratuity Act. Your employer is right in his decision on the eligibility criteria.
In the second part: To get your gratuity, you have to file a case against the employer claiming gratuity. In this case, the court is the right forum to consider your conceived norms - "4 years of continuous service and the 5th year of 240 days fall under this Gratuity eligibility." You can file the case and refer to the Varma Industries Pvt Ltd Gratuity case of the Karnataka High Court, as your employer did not pay you the gratuity within the stipulated time, and WP2135 of 1987 of the Madras High Court for the years of service.
From India, Mumbai
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In the first part: You can only be eligible for gratuity after 1.04.2021 because you are completing 5 years of service on that day. It also requires assessing whether all these five years are of continuous nature or not. This is the thumb rule of the Gratuity Act. Your employer is right in his decision on the eligibility criteria.
In the second part: To get your gratuity, you have to file a case against the employer claiming gratuity. In this case, the court is the right forum to consider your conceived norms - "4 years of continuous service and the 5th year of 240 days fall under this Gratuity eligibility." You can file the case and refer to the Varma Industries Pvt Ltd Gratuity case of the Karnataka High Court, as your employer did not pay you the gratuity within the stipulated time, and WP2135 of 1987 of the Madras High Court for the years of service.
From India, Mumbai
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Nowhere in the Payment of Gratuity Act is it mentioned that "4 years of continuous service and the 5th year of 240 days come under this Gratuity eligibility." As per the Act, an employee becomes eligible for gratuity only when they complete 5 years of "continuous service." It is while interpreting the meaning of continuous service that it is stated that 240 days in a period of 12 months would constitute continuous service. Therefore, the primary requirement for gratuity is the completion of 5 years, and the secondary requirement is that the service should be continuous, uninterrupted, or without any break. Then comes what constitutes continuous service, which is 240 days of service.
If you start calculating service in compartments of 240 days, it may even lead to other demands. For example, over 5 years, there would be 1200 days (5X240), and one may have worked for 365 days a year. In total, after 3 years and a few months, they would complete 1200 days. Would this individual be eligible for gratuity? No.
However, there are two verdicts from High Courts (Kerala and Madras) directing the employers to pay gratuity to the respective employees who have not completed 5 years but have worked for 4 years and 240 days in the fifth year. Based on these judgments, you can also demand gratuity from your employer. The employer can deny it, stating that nowhere in the Act does it mention that 4 years and 240 days of service would be enough for entitlement to gratuity. The employer may refuse to accept a ruling by a High Court of another state, though the dictum of the verdict shall be adopted in reference.
From India, Kannur
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If you start calculating service in compartments of 240 days, it may even lead to other demands. For example, over 5 years, there would be 1200 days (5X240), and one may have worked for 365 days a year. In total, after 3 years and a few months, they would complete 1200 days. Would this individual be eligible for gratuity? No.
However, there are two verdicts from High Courts (Kerala and Madras) directing the employers to pay gratuity to the respective employees who have not completed 5 years but have worked for 4 years and 240 days in the fifth year. Based on these judgments, you can also demand gratuity from your employer. The employer can deny it, stating that nowhere in the Act does it mention that 4 years and 240 days of service would be enough for entitlement to gratuity. The employer may refuse to accept a ruling by a High Court of another state, though the dictum of the verdict shall be adopted in reference.
From India, Kannur
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@ Madhu sir: When we calculate 240 days for gratuity purpose,Is it means that 240 days i.e (Actual present days or paid days inclusive of all holidays/weeklyoff/leave with wages?//// Please clairfy
From India, Shahkot
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From India, Shahkot
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Even though the questions about the actual meaning of the term 'continuous service' under Section 2-A of the Payment of Gratuity Act, 1972 vis-a-vis its Section 4(1) and the acceptability of the interpretation of the same by the Madras High Court in the Mettur Beardsel Ltd case are oft-repeated, I would like to highlight that Section 2-A of the PGA is in pari materia with Section 25-B of the Industrial Disputes Act, 1947, which also defines continuous service. The Supreme Court laid down the method of calculation of continuous service in a similar fashion to that of the Madras High Court in the cases of Sureshkumar Verma v. Central Govt. Industrial Tribunal [1980 (4) SCC 433] and Mohanlal v. Bharat Electronics Ltd [AIR 1981 SC 1253].
Regarding the questions of the binding nature and acceptability of the ratio decidendi of one particular High Court by other High Courts, I would point out further that in Valliamma Champaka Pillai v. Sivadhanupillai [1979 (8) TMI 210], the Supreme Court held that it is well-settled that the decision of one High Court is not a binding precedent upon another High Court and at least can have persuasive value. However, at the cost of repetition, we must emphasize that the decision of another High Court rendered in the context of an all-India Act would have persuasive value and normally to maintain uniformity and certainty, we would adopt the view of that High Court.
To my knowledge, so far there is no contrary judgment in this regard by any other High Court. As it is clearly evident that there is an interpretative analogy between the earlier judgments of the Supreme Court and the judgment of the Madras High Court cited above, the doctrine of persuasive adoption of the judgment of one High Court in a Central law for the sake of uniformity and certainty, as laid down by the Apex Court, should be followed unless there is any contextual difference.
Hence, the poster can file a formal claim before the Controlling Authority under the PGA for gratuity together with interest for the period of default.
From India, Salem
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Regarding the questions of the binding nature and acceptability of the ratio decidendi of one particular High Court by other High Courts, I would point out further that in Valliamma Champaka Pillai v. Sivadhanupillai [1979 (8) TMI 210], the Supreme Court held that it is well-settled that the decision of one High Court is not a binding precedent upon another High Court and at least can have persuasive value. However, at the cost of repetition, we must emphasize that the decision of another High Court rendered in the context of an all-India Act would have persuasive value and normally to maintain uniformity and certainty, we would adopt the view of that High Court.
To my knowledge, so far there is no contrary judgment in this regard by any other High Court. As it is clearly evident that there is an interpretative analogy between the earlier judgments of the Supreme Court and the judgment of the Madras High Court cited above, the doctrine of persuasive adoption of the judgment of one High Court in a Central law for the sake of uniformity and certainty, as laid down by the Apex Court, should be followed unless there is any contextual difference.
Hence, the poster can file a formal claim before the Controlling Authority under the PGA for gratuity together with interest for the period of default.
From India, Salem
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Dear Vijendra,
For calculating 240 days under any Act, the days the employee remained on leave with pay, his paid weekly off days, paid holidays, and of course, in the case of females, maternity leave days, will be considered as days worked. In short, 240 days are the 240 PAID DAYS.
From India, Kannur
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For calculating 240 days under any Act, the days the employee remained on leave with pay, his paid weekly off days, paid holidays, and of course, in the case of females, maternity leave days, will be considered as days worked. In short, 240 days are the 240 PAID DAYS.
From India, Kannur
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Dear Seniors,
As per the Payment of Gratuity Act (PGA), 5 years of continuous service is mandatory for gratuity payment. In a recent development, the Madras High Court has clarified that having 4 years and 240 days of service in the 5th year will make an employee eligible for gratuity. I would like to know if this ruling applies to all forms of separation, including involuntary separations like retrenchment and termination, as well as voluntary resignations.
If this ruling applies universally, I am curious why the government has not amended the act itself to provide clearer guidelines. Your valuable input on this matter would be greatly appreciated.
Best regards,
S. Rangarajan
From India, Pondicherry
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As per the Payment of Gratuity Act (PGA), 5 years of continuous service is mandatory for gratuity payment. In a recent development, the Madras High Court has clarified that having 4 years and 240 days of service in the 5th year will make an employee eligible for gratuity. I would like to know if this ruling applies to all forms of separation, including involuntary separations like retrenchment and termination, as well as voluntary resignations.
If this ruling applies universally, I am curious why the government has not amended the act itself to provide clearer guidelines. Your valuable input on this matter would be greatly appreciated.
Best regards,
S. Rangarajan
From India, Pondicherry
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Dear Rangarajan,
I am not sure whether your interest that prompted the question again is whether employee-specific, employer-specific, or law-specific.
Amendment of a particular provision of any law is imperative only when it is inconsistent with any other provision of the same law or any other corresponding law in force.
So far as the subject matter of gratuity is concerned, the Payment of Gratuity Act, 1972, is in itself a complete Code. Section 4(1) of the Act provides that gratuity shall be payable to an employee on the termination of his employment due to certain reasons after he has rendered continuous service for not less than five years. The proviso to the above sub-section gives relaxation to the above condition in the case of death or disablement of the employee. Here the quantum of not less than five years is qualified by the phrase "continuous service," which has been defined under section 2-A of the Act. Section 2-A not only defines the term but also lays down how it should be calculated. As I mentioned in my previous post, the definition under section 2-A of the PGA, 1972, is similar to that of section 25-B of the Industrial Disputes Act, 1947, in content, meaning, and the method of calculation. Therefore, the fact of the matter is not the passage of the period of five years but the completion of the continuous service of 240 days or 190 days, as the case may be, every year within the said stretch of five years. Thus, it is a matter of interpretation only in which the rule of beneficial construction has to be adopted as the PGA, 1972, is a welfare legislation covering the important aspect of social security for the working class.
That is why the definition of continuous service is retained under section 54 of the Code on Social Security, 2020, without any change.
From India, Salem
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I am not sure whether your interest that prompted the question again is whether employee-specific, employer-specific, or law-specific.
Amendment of a particular provision of any law is imperative only when it is inconsistent with any other provision of the same law or any other corresponding law in force.
So far as the subject matter of gratuity is concerned, the Payment of Gratuity Act, 1972, is in itself a complete Code. Section 4(1) of the Act provides that gratuity shall be payable to an employee on the termination of his employment due to certain reasons after he has rendered continuous service for not less than five years. The proviso to the above sub-section gives relaxation to the above condition in the case of death or disablement of the employee. Here the quantum of not less than five years is qualified by the phrase "continuous service," which has been defined under section 2-A of the Act. Section 2-A not only defines the term but also lays down how it should be calculated. As I mentioned in my previous post, the definition under section 2-A of the PGA, 1972, is similar to that of section 25-B of the Industrial Disputes Act, 1947, in content, meaning, and the method of calculation. Therefore, the fact of the matter is not the passage of the period of five years but the completion of the continuous service of 240 days or 190 days, as the case may be, every year within the said stretch of five years. Thus, it is a matter of interpretation only in which the rule of beneficial construction has to be adopted as the PGA, 1972, is a welfare legislation covering the important aspect of social security for the working class.
That is why the definition of continuous service is retained under section 54 of the Code on Social Security, 2020, without any change.
From India, Salem
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Gratuity Act-Teachers-Ma dhya Pradesh.docx
Payment of Gratuity Act, 1972 & The Rules.ppt