14 August 2011
The act itself is self explanatory.Sbu section (2) of section 4 states as follows:-
(2) 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:
It goes without saying if you have completed 4 years and six months and above it shall be demmed as five year service and you become eligible. The court order once again confirms this by judicial pronouncement.
The gratuity eligibility as per Gratuity Act 1972 is 5 years of continuous service. Sub section (2) of section 4 is for calculation of gratuity and not for the eligibility of gratuity.
But as per the judgment of the Supreme Court an employee is eligible for gratuity if he has completed 4 years of continuous service and 240 days continuous working in 5th year. On the day when he completes his 240 days in the 5th year he will be eligible for gratuity.
The judgment of Supreme Court rendered under the provisions of the Industrial Dispute Act in Surendra Kumar Verma vs. Central Govt. Industrial Tribunal,[(1980) (4) S.C.C.433)], it is enough that an employee has a service of 240 days in the preceding 12 months and it is not necessary that he should have completed one whole year’s service. As the definition of continuous service in Industrial Dispute Act and Payment of Gratuity Act are synonymous, the same principal can be adopted under the act also and hence an employee rendering service of 4 year 10months 11days is considered to have completed 5 years continuous service under sec.4(2) and thereby is eligible for gratuity."
Now almost all organizations are paying gratuity if an employee has completed 4 years of continuous service and 240 days continuous working in 5th year
18 August 2011
The judgement delivered by the Madras High Court on the eligibility of gratuity is attached for the convenience of the queriest.
1998 LLR 1072 MADRAS HIGH COURT Hon’ble Mr. S.M. Abdul Wahab J. W.P. No. 21350f1987 Decided on 12.6.1996
MetturBeardseU Ltd. (represented by Its Personnel Manager), Madras vs. Regional Labour Commissioner (Central) (Authority under Payment of Gratuity Act). Madras & Others
PAYMENT OF GRATUITY ACT 1972- Sections 2(a), 2(b), 2(c), 2(e) and 2A -'Continuous service' - Qualifying period of service by an employee –Entitlement of Gratuity - An employee rendering continuous service for a period of 240 days in a year will be deemed to have continued in service for 'one year as stipulated by section 2A of the Act -Thus an employee who has Put in service for 10 months and 18 days for the fifth year subsequent to first 4 years should be deemed to have completed continuous s6rvice of five years -His claim for gratuity is tenable.