# Gratuity payment

This query is : Resolved

(Querist)
24 March 2020

Need your advise and consultation regarding my gratuity issue.

As per my company HR the calculation is as below.

DOJ 17/09/2014
DOR 13/03/2020
Total Service 5 yrs .5 months
Gratuity Calculation Purpose 5 Yrs

According to me it is 5 year 5 month 26 days.

As per gratuity act 26 days will be considered as 1 month so it will be 5.6 :)...??

so i should get gratuity for 6 years and not 5 years.

if its 30 days instead of 26 days, I will loose money just by miss of 5 days. Can you please clarify.

BRs,
Lokesh

Rajendra K Goyal (Expert)
24 March 2020

Since your service is less than 6 months in 6th year, gratuity payable is for 5 years.

Lokesh (Querist)
24 March 2020

Thanks for your reply sir, but i see only 5 days of shortfall. As per gratuity act the calculation is done considering 26 days, my firm is register under gratuity act..!!

Isaac Gabriel (Expert)
24 March 2020

If the fraction left over exceeds 6 months, it could be computed as one year.Otherwise it could be ignored.

Lokesh (Querist)
24 March 2020

so 1 month is equal to 30 or 26 days..!!

Rajendra K Goyal (Expert)
24 March 2020

You have not completed more than 6 months in 5th year, your service would be taken as 5 years.

You can calculate with following formula:
No. of years x last drawn salary (BP+DA) x (15 /26)

kavksatyanarayana (Expert)
24 March 2020

You have not completed 6 months service. You have completed only 5 years and 5 months, 27 days only. so you are eligible for 6 years gratuity.

Raj Kumar Makkad (Expert)
24 March 2020

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 10 months 11 days 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).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 Date of Joining: 1.05.2000 -

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

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.

If the Rule of 4 years & 240 days is followed then you are entitled for the grant of gratuity of 6 years.

P. Venu (Expert)
25 March 2020

You have a valid point. You can escalate the matter, if so advised.

Lokesh (Querist)
25 March 2020

other have difference opinion than Mr. Raj. Bit confuse on conclusion. Our Organization work 5 days a week. How can i know if they follow 190 day or 240 days rule?

Lokesh (Querist)
25 March 2020

Dear Sir,
Sorry sir but i couldn't understand the explanation you have given above..

How 240 and 190 days are calculated? In our organization 4.8 years doesn't apply, gratuity can be claim even employee work for one year. They are using LIC gratuity plan..!!
BRs,Lokesh

Rajendra K Goyal (Expert)
25 March 2020

5 days a week work is considered where service is less than 5 years but more than 4 years to arrive at the eligibility.

Lokesh (Querist)
25 March 2020

Sir i know i am eligible for gratuity but my question is if i am eligible for 5 yrs or 6 yrs(since i spent 5 years, 5 months and 26 days in organization). As per Mr. Raj i am eligible for 6 yrs if 240 days rule is used but others saying 5 yrs.

T. Kalaiselvan, Advocate (Expert)
25 March 2020

Gratuity in India is calculated using the formula:

Gratuity = Last Drawn Salary × 15/26 × No. of Years of Service

Notes:

The ratio 15/26 represents 15 days out of 26 working days in a month.
Last drawn salary = Basic Salary + Dearness Allowance.
Years of Service are rounded down to the nearest full year. For example, if the employee has a total service of 20 years, 10 months and 25 days, 21 years will be factored into the calculation.
In the above case, we have taken 21 years as tenure of service because A has worked for more than 6 months in year. Had he worked for 20 years and 5 months, 20 years of service would have been taken into account while calculating the gratuity amount.

Hope the above explanation makes it clear that you may be eligible for 5 years gratuity alone and not for 6 years as you may have incorrectly interpreted the law.

Rajendra K Goyal (Expert)
25 March 2020

Sir,
as per my understanding 180 days or 240 days rule is for last year (after 5th year), if completed would be counted as full year i.e your service would be counted for 6 years in that case. In present situation ot would be 5 years only.

Lokesh (Querist)
25 March 2020

Sept 17 2014 ~ Sep 16 2019 => 5 years
Sept 17 2019 ~ March 13 2020 => 179 Days

Sept 17 2019 ~ March 15 2020 => 181 Days (As 14, 15 March Weekend)

I joined another organization on 16th March.

So i still feel eligible for 6 years gratuity not 5 years.

Rajendra K Goyal (Expert)
25 March 2020

What was date of resignation and acceptance of the same?

What was end of notice period?

Payment of salary received upto which date?

Raj Kumar Makkad (Expert)
26 March 2020

Though you have already provided enough information, yet some more is required to be furnished so as to enable the experts to re-examine their own final advice already provided.

Raj Kumar Makkad (Expert)
26 March 2020

Though you have already provided enough information, yet some more is required to be furnished so as to enable the experts to re-examine their own final advice already provided.

Raj Kumar Makkad (Expert)
26 March 2020

Though you have already provided enough information, yet some more is required to be furnished so as to enable the experts to re-examine their own final advice already provided.

T. Kalaiselvan, Advocate (Expert)
26 March 2020

If the author feels that he is eligible for gratuity payment for 6 years despite giving him proper explanation, he is at his liberty to fight it out through legal sources.
It will be good for him if he gets some benefits by tapping some loopholes of law.

Rajendra K Goyal (Expert)
26 March 2020

Definitely it would be a matter of happiness if he gets gratuity for 6 years.

Service is counted till the date relieved from service and not the date he joined other concern.

Lokesh (Querist)
26 March 2020

Dear all,

Thanks for your positive note and quick replies.

My resignation date is 9th Jan 2020, 10th my superior accepted the resignation.

My notice period is 2 months.

My last working day was 13th March 2020, so i am suppose to get salary upto 13th March, which will be clear once salary remittance on 31st March and salary slip is provided.

Rajendra K Goyal (Expert)
26 March 2020

Dear Author,
You have calculated that you have served 181 days (without going in details) in last year of your service. In your post dated 25.03.2020 you have mentioned that your organisation has 5 days a week, in such case 240 days has to be completed after 5 years to be counted for 6 years.

Raj Kumar Makkad (Expert)
26 March 2020

As your orgnaization has taken LIC Life Scheme for the purpose of gratuity, let them decide. Fill only form as per prescription.

Rajendra K Goyal (Expert)
27 March 2020

In LIC Gratuity Scheme, gratuity is payable after five years of service.

Rules are similar.

Raj Kumar Makkad (Expert)
27 March 2020

LIC Gratuity Rules provide gratuity even after the service of one year so rules are different there,

Rajendra K Goyal (Expert)
28 March 2020

The time of one year is not material / applicable in this case.

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