Dear Sir/Madam,
I worked for 4 years and 7 months in a private IT organization. The organization operates on a 5-day work schedule for employees, but the monthly payslip reflects total calendar days. The organization states that an employee must complete a minimum of 240 days in the fifth year to be eligible. For organizations with a 5-day workweek and employees working underground, 190 days are considered. Is this information accurate? Is it possible to receive my gratuity for the 4 years and 7 months I worked?
Many thanks in advance for your time.
From India, Hyderabad
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I worked for 4 years and 7 months in a private IT organization. The organization operates on a 5-day work schedule for employees, but the monthly payslip reflects total calendar days. The organization states that an employee must complete a minimum of 240 days in the fifth year to be eligible. For organizations with a 5-day workweek and employees working underground, 190 days are considered. Is this information accurate? Is it possible to receive my gratuity for the 4 years and 7 months I worked?
Many thanks in advance for your time.
From India, Hyderabad
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This is an issue very commonly raised. It is true that for deciding the eligibility for gratuity, there should be 5 years with each year qualifying for 240 days in the case of workers working for six days in a week and above the ground or 190 days in the case of workers working for five days a week and below the ground of a mine. This 240 or 190 days, as the case may be, is inclusive of weekly off days, paid holidays, and paid leave days. A regular employee gets a salary for the month and in this process, we take 30 or 31 days, whereas the daily rated workers are paid for the actual physical days worked. In respect of daily rated workers, the concept of 240/190 days is okay, but in respect of monthly paid workers who are paid for the holidays and leave days, what is the significance of 240 and 190 days?
Kerala High Court and Madras High Court have ruled in separate verdicts that an employee who has worked for 4 years and 240 days in the fifth year is eligible to get gratuity. If we widen the scope of this ruling to employees in the establishments which work for 5 days in a week, the same should be applicable to employees who have worked for 4 years and 190 days in the fifth year.
In both the High Court verdicts, I feel that there is an error, and that error is on the finding that 240 days would constitute a year's service. The Act says that each year with 240/190 days over a period of 12 months only shall be considered as continuous service and this comes only next to whether the employee is really eligible for gratuity. An employee, to be eligible for gratuity, should have completed five years of service, and each year should qualify for 240/190 days including paid holidays etc., etc. This 240/190 days are compartmentalized and are during a period of 12 months. Then why is this 12 month period not taken into account in the case of the fifth year?
The judgments say that you need to have only 240/190 days in the fifth year, and that means you need only 8 months or even 7 months in the fifth year to be entitled to gratuity. Is this fair?
Since there is no Supreme Court verdict which treats working for 240/190 days in the fifth year as one year of service, nor has any amendment been made in the Payment of Gratuity Act in this respect, I doubt if the 240/190 days in the fifth year would be sufficient for gratuity entitlement.
As the monthly rated employees are paid a full salary irrespective of the days worked, what is the relevance of 5 days working and 6 days working? It is okay with regard to workers employed below the ground because of the hardship to which they are put. But in respect of employees who work for 5 days but are paid for the entire week, is it fair? When we allow them the privilege of 190 days paid days, an employee who has worked in the fifth year for just six months will get gratuity.
I request my friends to please comment on this point.
From India, Kannur
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4765Kerala High Court and Madras High Court have ruled in separate verdicts that an employee who has worked for 4 years and 240 days in the fifth year is eligible to get gratuity. If we widen the scope of this ruling to employees in the establishments which work for 5 days in a week, the same should be applicable to employees who have worked for 4 years and 190 days in the fifth year.
In both the High Court verdicts, I feel that there is an error, and that error is on the finding that 240 days would constitute a year's service. The Act says that each year with 240/190 days over a period of 12 months only shall be considered as continuous service and this comes only next to whether the employee is really eligible for gratuity. An employee, to be eligible for gratuity, should have completed five years of service, and each year should qualify for 240/190 days including paid holidays etc., etc. This 240/190 days are compartmentalized and are during a period of 12 months. Then why is this 12 month period not taken into account in the case of the fifth year?
The judgments say that you need to have only 240/190 days in the fifth year, and that means you need only 8 months or even 7 months in the fifth year to be entitled to gratuity. Is this fair?
Since there is no Supreme Court verdict which treats working for 240/190 days in the fifth year as one year of service, nor has any amendment been made in the Payment of Gratuity Act in this respect, I doubt if the 240/190 days in the fifth year would be sufficient for gratuity entitlement.
As the monthly rated employees are paid a full salary irrespective of the days worked, what is the relevance of 5 days working and 6 days working? It is okay with regard to workers employed below the ground because of the hardship to which they are put. But in respect of employees who work for 5 days but are paid for the entire week, is it fair? When we allow them the privilege of 190 days paid days, an employee who has worked in the fifth year for just six months will get gratuity.
I request my friends to please comment on this point.
From India, Kannur
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I fully agree with the error and misunderstanding of 240/190 days here; many people are experiencing this situation. Gratuity is part of CTC. If anyone wants to avail the benefit and doesn't want to lose the amount, they should stay with the organization for at least 5 years.
No exceptions should be considered for resigned employees who are getting paid for the whole month but working only 5 or 6 days a week. The organization is paying employees for non-working days as well. Some employees work 8-9 hours a day and take week offs, while others support the organization outside of office hours, during tough times, sacrificing weekends, and facing the fear of losing their jobs due to organizational changes, situations like COVID, recession, etc.
If 5 years is a must, then why compromise on 4 months or support 240 days? Many employees leave organizations within 5 years and can simply leave and forget about the Gratuity, which is a recognition from the employer for standing with the organization, though it's part of CTC. Exceptions should only be made for illness, accidents, or other unforeseen circumstances.
PF is part of CTC, Gratuity is part of CTC. Are there any organizations that won't consider these outside of CTC?
I'm not against any employee/employer/sections/policies. Healthy discussions help a lot, clarify things for everyone, bridge gaps, make improvements, and set expectations correctly for all :)
Thank you.
From India, Hyderabad
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No exceptions should be considered for resigned employees who are getting paid for the whole month but working only 5 or 6 days a week. The organization is paying employees for non-working days as well. Some employees work 8-9 hours a day and take week offs, while others support the organization outside of office hours, during tough times, sacrificing weekends, and facing the fear of losing their jobs due to organizational changes, situations like COVID, recession, etc.
If 5 years is a must, then why compromise on 4 months or support 240 days? Many employees leave organizations within 5 years and can simply leave and forget about the Gratuity, which is a recognition from the employer for standing with the organization, though it's part of CTC. Exceptions should only be made for illness, accidents, or other unforeseen circumstances.
PF is part of CTC, Gratuity is part of CTC. Are there any organizations that won't consider these outside of CTC?
I'm not against any employee/employer/sections/policies. Healthy discussions help a lot, clarify things for everyone, bridge gaps, make improvements, and set expectations correctly for all :)
Thank you.
From India, Hyderabad
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From "The Payment of Gratuity Act"
The Payment of Gratuity Act, 1972 Sec. 3
2A. Continuous Service.- (1) For the purpose of this Act:
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 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;
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 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 one hundred and ninety 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 two hundred and forty days, in any other case; 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 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 one hundred and twenty days, in any other case; Explanation.- For the purpose of clause (2), the number of days on which an employee has actually worked under an employer shall include the days on which 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; he has been on leave with full wages, earned in the previous year; he has been absent due to temporary disablement caused by accident arising out of and in the course of his employment; and in the case of a female, she has been on maternity leave; so, however, that the total period of such maternity leave does not exceed twelve weeks.
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.
From India, Hyderabad
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The Payment of Gratuity Act, 1972 Sec. 3
2A. Continuous Service.- (1) For the purpose of this Act:
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 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;
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 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 one hundred and ninety 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 two hundred and forty days, in any other case; 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 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 one hundred and twenty days, in any other case; Explanation.- For the purpose of clause (2), the number of days on which an employee has actually worked under an employer shall include the days on which 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; he has been on leave with full wages, earned in the previous year; he has been absent due to temporary disablement caused by accident arising out of and in the course of his employment; and in the case of a female, she has been on maternity leave; so, however, that the total period of such maternity leave does not exceed twelve weeks.
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.
From India, Hyderabad
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I am wondering why you have posted this twice and what exactly your question is if you already have so much information and a definite opinion on it. By your own admission, having 4 years and 8 months is the cut off. So, what is your query?
From India, Mumbai
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From India, Mumbai
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Saswata Sir,
I was not clear about the days, and the 1st reply to my query pushed me to different aspects. Finally, I was able to understand what's mentioned in The Payment of Gratuity Act, 1972. So, I have included the same here for others' reference.
I'm good now. Thank you.
From India, Hyderabad
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I was not clear about the days, and the 1st reply to my query pushed me to different aspects. Finally, I was able to understand what's mentioned in The Payment of Gratuity Act, 1972. So, I have included the same here for others' reference.
I'm good now. Thank you.
From India, Hyderabad
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Gratuity-Contin uous Service-countin g broken period with same employer-Madras HC Judgment.docx