Dear All,
Kindly help me understand the eligibility criteria for Gratuity payment. My doubt is:
A) Is it 5 years of continuous service (Plain reading of the Act) or
B) 4.6 years of continuous service - computed as 5 years for the purpose of calculation (This is a doubt in my mind) or
C) 4 years and 240 days (As per HC judgment).
I have gone through earlier discussions conducted by learned members of this forum, but still having doubt regarding its finality. Kindly help me, and I apologize for repeating the same discussion.
Thanks in advance to all.
From India, Kollam
Acknowledge(0)
Amend(0)
6Kindly help me understand the eligibility criteria for Gratuity payment. My doubt is:
A) Is it 5 years of continuous service (Plain reading of the Act) or
B) 4.6 years of continuous service - computed as 5 years for the purpose of calculation (This is a doubt in my mind) or
C) 4 years and 240 days (As per HC judgment).
I have gone through earlier discussions conducted by learned members of this forum, but still having doubt regarding its finality. Kindly help me, and I apologize for repeating the same discussion.
Thanks in advance to all.
From India, Kollam
Acknowledge(0)Amend(0)
As per the Payment of Gratuity Act, an employee who has completed 5 years of continuous service only is eligible to receive gratuity. When calculating continuous service, an employee who has worked for 240 days in 12 months only is considered as having continuous service. The Madras High Court and Kerala High Court verdicts in Mettur Bearsell's case and Sreeja's case, respectively, have considered the 240 days in the fifth year as one year. However, my understanding of the provision in the Act is that it is meant to determine the continuous service, where 240 days shall be considered, and not for the eligibility criteria.
At the same time, since there is a court verdict and the dictum of the verdict shall be applied to any similar instances, establishments have started paying gratuity to those who have left service after completing 4 years and 240 days in the fifth year. As 240 days mean 240 paid days, which will include all paid-off days, holidays, and leave days, it will likely require 8 months to accumulate 240 days. Therefore, 6 months in the fifth year are undoubtedly out of the scope of gratuity.
From India, Kannur
Acknowledge(4)
Amend(0)
At the same time, since there is a court verdict and the dictum of the verdict shall be applied to any similar instances, establishments have started paying gratuity to those who have left service after completing 4 years and 240 days in the fifth year. As 240 days mean 240 paid days, which will include all paid-off days, holidays, and leave days, it will likely require 8 months to accumulate 240 days. Therefore, 6 months in the fifth year are undoubtedly out of the scope of gratuity.
From India, Kannur
Acknowledge(4)Amend(0)
The formula of 4 years + 240 days as eligibility is a judicial interpretation given by the Madras High Court, whereas the textual provision in the PGA 1972 is five years. The 240 days of service that would count as Continuous Service for the year is based on Section 2(2)(a)(ii) of the Act and is a deeming provision. That means where there is no continuous service for the full year, then if such discontinuous service exceeds 240 days in a year, the employee is deemed eligible for gratuity for that year.
Section 4(1) is clear and categorical that eligibility is only after 5 years of continuous service. Section 4(2) mandates that gratuity has to be paid for every completed year of service, and for such periods of service in excess of 6 months, there is eligibility to receive gratuity. Section 4(2) is not an exception or does not modify the mandate of Section 4(1). So, read together, the 240 days criteria would apply where there is interrupted service (that is off and on service), and the six months + service is only for counting the number of years, not applicable for eligibility.
From India, Mumbai
Acknowledge(2)Amend(0)
0
0
Section 4(1) is clear and categorical that eligibility is only after 5 years of continuous service. Section 4(2) mandates that gratuity has to be paid for every completed year of service, and for such periods of service in excess of 6 months, there is eligibility to receive gratuity. Section 4(2) is not an exception or does not modify the mandate of Section 4(1). So, read together, the 240 days criteria would apply where there is interrupted service (that is off and on service), and the six months + service is only for counting the number of years, not applicable for eligibility.
From India, Mumbai
Acknowledge(2)Amend(0)CiteHR.AI
(Fact Checked)-The user reply is mostly correct, aligning with the provisions of the Payment of Gratuity Act, 1972. No amendments needed. (1 Acknowledge point)
0
0
Thankyou Dear Madhu Sir and KK!HR for clarifying the doubts. Your explanations will prove very useful. Regards,
From India, Kollam
Acknowledge(1)
Amend(0)
0
0
From India, Kollam
Acknowledge(1)Amend(0)CiteHR.AI
(Fact Check Failed/Partial)-[The reply does not address the user's query about the eligibility criteria for Gratuity payment. It is more of a general acknowledgment rather than providing specific clarification. It would be beneficial to offer details regarding the eligibility criteria mentioned in the original post.]
0
0
Dear Adv M Munwar,
Regarding your query, both Mr. Madhu and Mr. KK have already provided their perspectives, which should be taken into consideration based on the current situation.
Gratuity is payable after completing 5 years of continuous service, as required by the Industrial Disputes Act. While High Court judgments are specific to each case, they do not hold the status of law unless officially notified. It is essential to assess the circumstances and decide whether payment or receipt is appropriate based on individual suitability.
Thank you.
From India, Mumbai
Acknowledge(1)Amend(0)
0
0
Regarding your query, both Mr. Madhu and Mr. KK have already provided their perspectives, which should be taken into consideration based on the current situation.
Gratuity is payable after completing 5 years of continuous service, as required by the Industrial Disputes Act. While High Court judgments are specific to each case, they do not hold the status of law unless officially notified. It is essential to assess the circumstances and decide whether payment or receipt is appropriate based on individual suitability.
Thank you.
From India, Mumbai
Acknowledge(1)Amend(0)CiteHR.AI
(Fact Check Failed/Partial)-The user reply contains some inaccuracies regarding the eligibility criteria for gratuity payment. Continuous service of 5 years is indeed required as per the Payment of Gratuity Act, 1972. High Court judgments can set precedents but do not replace statutory provisions.
0
0
Dear Prabhat Ranjan Mohanty Sir,
Thank you for sharing your views. To conclude my understanding as you have suggested, the court verdicts only apply in similar nature of establishments and instances, and it is up to the employers to decide whether gratuity is to be paid before 5 years or not. The default mandatory eligibility period always remains at 5 years.
I hope I have interpreted this correctly.
From India, Kollam
Acknowledge(1)Amend(0)
0
0
Thank you for sharing your views. To conclude my understanding as you have suggested, the court verdicts only apply in similar nature of establishments and instances, and it is up to the employers to decide whether gratuity is to be paid before 5 years or not. The default mandatory eligibility period always remains at 5 years.
I hope I have interpreted this correctly.
From India, Kollam
Acknowledge(1)Amend(0)CiteHR.AI
(Fact Check Failed/Partial)-The user reply is incorrect. According to the Payment of Gratuity Act, 1972, the minimum eligibility period for gratuity payment is 5 years of continuous service. The High Court judgement mentioned in option C of the original post does not override this statutory requirement.
0
0
Yes. But the dictum of a High Court verdict shall be applied to any similar incidents. For example, the Kerala High Court verdict in Sreeja Vs Regional Joint Labour Commissioner [2015 LLR 826] came in 2015. Till then, the Labour Officers, the controlling authority under the Payment of Gratuity Act in Kerala, used to take 5 years of service as the base for entitlement of gratuity. But since the above decision, they started considering 4 years and 240 days of service as the base. Even now, employers contact me for advice on this matter. But I used to say that the Payment of Gratuity Act states that a minimum service of 5 years and 240 days is relevant only to decide whether the service has been continuous or not. I also tell them that there is a court verdict (above referred) which directs the payment of gratuity to an employee who has worked for 4 years and 240 days in the fifth year. The final decision should come from the management. If the employee decides to go legal, he can win.
From India, Kannur
Acknowledge(1)Amend(0)
0
0
From India, Kannur
Acknowledge(1)Amend(0)CiteHR.AI
(Fact Check Failed/Partial)-The user reply contains inaccurate information regarding the eligibility criteria for gratuity payment. The Payment of Gratuity Act specifies a minimum continuous service of 5 years for gratuity entitlement. The reference to the Kerala High Court verdict is not in line with the statutory requirement.
0
0
Dear Madhu Sir, Thankyou once again for your clarification. It is indeed a tricky situation. I will take this advice and keep a vigilant eye on developments on the same.
From India, Kollam
Acknowledge(1)Amend(0)
0
0
From India, Kollam
Acknowledge(1)Amend(0)CiteHR.AI
(Fact Check Failed/Partial)-The user reply is incorrect. The eligibility criteria for Gratuity payment is 5 years of continuous service as per the Payment of Gratuity Act.
0
0
Engage with peers to discuss and resolve work and business challenges collaboratively - share and document your knowledge. Our AI-powered platform, features real-time fact-checking, peer reviews, and an extensive historical knowledge base. - Join & Be Part Of Our Community.
Less than 5 years service - Eligibility for payment of gratuity.pdf
CiteHR.AI
(Fact Check Failed/Partial)-The user reply contains inaccuracies. According to the Payment of Gratuity Act, 1972, an employee is eligible for gratuity after completing 5 years of continuous service. The provision of 240 days is for calculating continuous service, not for eligibility. The court verdicts mentioned do not change the eligibility criteria set by the Act.