Clarity between gratuity eligibility service (5 or 4.8 yrs)?

Lead

Clarity between gratuity eligibility service (5 or 4.8 yrs)?

The gratuity eligibility service as per Gratuity Act 1972 is 5 years.

But as per the judgment from Supreme Court below and the quotation from the book quoted below it seems that the gratuity eligibility service is 4 years 240 days.

"Judgment from Supreme Court:

"Yes, by virtue of 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."

Quotation from the book:

Law Book (Bare Act,2004) i.e. The Payment of Gratuity Act,1972 (Publisher: Law Publishers () Pvt.Ltd. 18A-S.P.Marg,Post Box-1077,Allahabad-211 001. Phone:623735,623741 Fax-0532-622276.website: lawpublishersindia.com

1. 4 years and 6 months (190 days = 1 year) where the company follows 5 day a week.

2. 4 years and 8 months ( 240 days = 1 year) where the company follows 5 day a week.

Is eligible for gratuity.The payment of gratuity ( second amendment) act, 1984 clarifies this. One needs to calculate the no of years and service completion as follows.

A company which follows 5 day week

Doj 1.05.2000 -

01.05.2000 to 30.04.2001 - worked for 190 days
01.05.2001 to 30.04.2002 - worked for 190days

If we go by the above formula and if the person does not have any break in service he will be eligible for gratuity on 01.11.2004 "

Non clarity of this rule has created confusion among a lot of employees. As some hear that some companies are following the 4 years 240 days rule, while some follow the 5 year rule. Please help remove this confusion so that nobody rights of gratuity are being compromised on. Expert Lawyer may please give his comments and advice. . 


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Dear Sidd,

Employee must work for 240 days in continuity of his service in last year. On the day when he completes his 240 days he will be eligible for gratuity. 

 
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Lead

Thanks Jayant for the clarity.

Can you please let me know the law / section or amendment that I can refer to for this.

This would help me share and communicate the reference with all in need, where we have confusion among 5 years and 4 years 240 days. We need to share the reference of this law, with the companies where the gratuity is still being paid after completion of continuous service of 5 years.

 
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Advocate/ Arbitrator

An employee who has put in his service for a period of 240 days in fifth year will be deemed to have continued in the service for 1 year.

Mettus Beardsell Ltd., Madrs Vs. RLC(C) 1998 LLR 1072(Mad)


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Lead

Thanks for the reply Isaac

Need a couple of clarifications:

1) What if the employee has unapproved leave during his continuous tenure of 4 years and 240 days. Will he have to work for those numbers of extra days in the organization?

For example, If an employee has an unapproved leave of 1 day in his tenure of 4 years and 240 days. Will he have to work for 1 extra day in the organization?

 

2) In the 5th year, employee has rendered continuous service for a period of = 240 days (including notice period served). Is the notice period taken in account while calculating the 240 days?

In the notice period the employee has been serving the company as a regular employee and has been performing all his duties and responsibilities. And he has been receiving his salary as usual for all his duties performed.

 

Request you to please reply these two clarifications. Thanks in advance for your co-operation. Anticipating an early response.

Regards.

 
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Advocate/ Arbitrator

If the period availed is treated as leave,be it paid or not paid it is counted towards the service period

The notice period service is also counted for his service.

 
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Hi, I have a query regarding gratuity eligibility.
Before resigning from my previous org, i wrote them a mail asking for gratuity qualification period,they replied back to me 4.6 yrs.
On confirmation from them that my period of stay in the org will be 4yrs 6 months 10 days,i resigned from the same.
Now,after 5 months i have still not got my money from that org.On writing the mail again they told me that in between the period the benchmark for gratuity has been revised upto 4.8 years.
 
I have everything on mail written by HR team, can i sue my previous org for misleading and misinformation?
In case i am eligible for gratuity,to whom shall i approach?
Is it advisable for me to lodge a legal complaint againt my previous employer?
 
Fyi: i resigned on 13-aug-2010 from my previous employer.
waiting for a reply.
Thanks
 
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Advocate/ Arbitrator

Revised regulations cannot take retrospective effect. File a petition with the Asst.Commissioner of Labour of your area claiming Gratuity.


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Thanks for the reply,just one more doubt,the headquarters of my previous employer is in mumbai. So shall i file a petition in Mumbai or in delhi ? Thanks
 
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Advocate/ Arbitrator

In this case, Employer and Employee falls under the jurisdiction of the Mumbai commissionerate, So it has to be filed at Mumbai.

 
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