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Rajesh Dhingra (Manager-F&A)     30 March 2013

Gratuity claim


I have joined in manufacturing firm on 14.1.2008 and forced to resign on 1.11.12 with a notice period 30Days and on 30.11.2012 they relieved me and paid me additional one month salary for the m/o Dec 12 as well.

Now as per the actual relieving day (30.11.12) my total working period is 4Y-10M-17D but if I take Dec12 for which Company paid me as a notice pay my total working period would be 4Y-11M-17D.

Sir as per the above senario would I be eligible for gratuity claim and if yes what salary components would be added for the purpose of calculating gratuity.

My salaries consists of (basic + hra+conveyance Allow+medical Allow+Travel Allow).

Please guide fully.




 13 Replies

V. VASUDEVAN (LEGAL COUNSEL)     30 March 2013

you are entitled for gratuity, on the basic salary.


Kumar Doab (FIN)     30 March 2013

Learned experts/members have given valuable advice. Kindly follow it.

You may submit FormI thru redg. post under proper acknowledgment.

shravan (hr generalist)     31 March 2013

you will get the Gratuity  based on your LAST DRAWN BASIC+DA

Rajesh Dhingra (Manager-F&A)     31 March 2013

Sir,thanks for your prompt reply & guidence but if they asked me that you have not completed full 5 years of service how should i explain them and under what law or any previous judgment on the issue.

Please guide properly.


Kumar Doab (FIN)     31 March 2013

The Payment of Gratuity Act, 1972 itself is self explanatory.

Why should there be any need for quoting the judgments, in the first place?

Employee should apply exceptional levels of persuasion, persistence, negotiation, reasoning skills and resolve the matter favorably.

If you have tendered notice of resignation then you have notified your date of retirement to the employer and you may submit (under proper acknowledgment) FormI for payment of gratuity one month in advance from date of retirement.



Payment of Gratuity Act, 1972

Section: 2A
Continuous service.
(1) an employee shall be said to be in continuous service for a period if he has, for that period, been in uninterrupted service, ……………..

The period above 6 months is treated as 1 year………..

Payment of Gratuity Act, 1972
Section: 2A
Continuous service.

The Section 2 (a) (i) -----190 days = 1 year if company operates 5days/week.

Section 2 (a) (ii)-------240 days= 1 year in any other case (if company operates 6 days/week).

Section 2 (b) (i) (ii) and Explanation (i) may also be looked into.


The Judgment Passed by Madras High Court in case of Mettur Beardsell Ltd has categorically specified that 240 days service in a year amounts to complete 1 year of service, for the purpose of payment of Gratuity, which is precise interpretation of the Payment of Gratuity Act.


You may go thru a very interesting thread on similar subject:


Discussion > Labour & Service Law > Gratuity > Clarity between gratuity eligibility service (5 or 4.8 yrs)?


V. VASUDEVAN (LEGAL COUNSEL)     31 March 2013


As per Section 4 (1) of payment of Gratuity Act, 1972 Gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years,- (a) on his superannuation, or (b) on his retirement or resignation, or (c) on his death or disablement due to accident or disease :

 Provided that the completion of continuous service of five years shall not be necessary where the termination of the employment of any employee is due to death or disablement :

 As per section 2 A continuous of services means, if an employee render continuous service for a period of 240 days in a year he will be deemed to have continued in service for one year. Therefore if an employee who has completed 240 days for the fifth year subsequent to first 4 years should be deemed to have completed continuous service of five years and he is entitled for Gratuity.

 ~r 1998 LLR 1072


Hon~ble Mr. S.M. Abdul Wahab~ J.

W.P. No. 21350f1987

Decided on 12.6.1996




I MetturBeardseU Ltd. (represented by Its

Personnel Manager), Madras


Regional Labour Commissioner (Central)

:0 (Authority under Payment of Gratuity Act).

1. Madras & Others



)r A.



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

P.ut 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.

. Para 5














Claim by an employee from the new

partnership firm for the .service rendered

with previous firm -Whether his

claim for gratuity sustainable? Yes. .






1998 Mettur BeardseU Ltd.. Madras v. Regional Labour Commissioner (Central). Madras &Others 1073

HELD exceeding. Rs. 1.000. Hence. on these

Anemployee will be entitled to get gratuity for grounds the claim of the third respondent

the seroices rendered. with previous partner- must be rejected. The claim was entertained

ship.ftmt because at the time of entertrig into by the second respondent in P.G. Application

new partnership jU:m the petitlDner has rwt No. 49 of 1985 under S. 7(4) of the Payment of

taken any W1dertaking from the employees Gratuity Act. But it was dismissed on 15 April

that they will become employees of new part- 1986 on the ground that he was not an emnershipfirm.

Para 5 ployee for a pertod of not less than five years

on wages not exceeding Rs. 1.000 within the

meaning of explanation 2(e) of the Payment of

Gratuity Act.

2. As against the said order. the third respondent

preferred an appeal to the first respondent

under S. 7(7) of the Payment of GratuityAct

in P.G. Appeal No. 58 of 1986. On 31

December 1986 the first respondent passed

orders holding that the third respondent's

wages crossed Rs. 1.000 only on 10 November

1982 and he had put in four years 10 months

and 18 days service. Hence there was continuous

semce under S; 2Aof the Payment of

.JUDGMENT Gratuity Act. He must be deemed to have

This writ petition is for a writ of certiorCJri to completed continuous service of five years. In

quash the order. dated 31 December 1986. in the said view the first respondent allowed the

P.G. Appeal No. 58 of 1986 on the file of the appeal of the third respondent. Therefore. the

first respondent. The cas~ of the petitioner is petitioner has preferred this writ petition unthat

on 23 December 1977 the third respon- der Art. 226 of the Constitution ofIndia.

dent was appointed as salesman and he was 3. The third respondent filed a counter. In

assigned to the thread division. From 1Janu- the counter he has mainly stated that he has

ary 1983. Mettur Textiles (Private). Ltd.. came produced documentary evidence to show that

to be known as Mettur Textiles. Thus the from 23.November 1977 to 4 November 1982

third respondent became an employee of the he was paid less than Rs. 1.000 and the con-

MetturTextiles from 1January 1983. Accord- tention that fiveyears calendar service is necing

to the petitioner. he ceased to be an-em- essary is untenable. He also contended that

ployee of Mettur Textiles. Ltd.. with effect the transfer of service from the petitioner to

from 31 December 1982. On 31 January Mettur Textiles did not cut his length of ser-

1983 the. third respondent resigned from the vice. Further his resignation was accepted

services and relieved on the said date. He was only by the writ-petiti()ner. as is evidenced by

getting Rs. 1.335 as monthly salary. Since. Exhibit P-5.

according to the third respondent. his basic 4. NowI will examine the contentions raised

salary crossed Rs. 1.000 with effect from 10 . by the learned counsel for the petitioner. Sec-

November 1982. he made a claim on 3 Marchtion 2(e)of the Payment of Gratuity Act was as

1983 for gratuity from Mettur Textiles. Hav- follows. before the amendment: .

ing failed in his attempt to get gratuity from '''employee'means any person (other than

Mettur Textiles. he preferred a claim on 14 an apprentice) employed on wages. not

February 19~5 against Mettur Beardsell. the exceeding one thousand rupees per

petitioner herein. The claim.was after a delay mensem. in any establishment. factory.

of two years and one month. The claim was mine. oil field.. plantation. port. railway

resisted by the petitioner on the ground that company or shop. to do any skilled. semihe

ceased to be an employee with them from skilled. or unskilled. manual. supervi"

31 I;>ecember 1982. Further. he was not em- sory. technical or clertcal work. whether

played for a period of five years on a wage not the terms of such employment are ex-


1. P. Raghavulu and Sons v. Addfttonal Labour Court.

1985-1LLN612. .

2. Surendra Kumar Verma v. Central Government Industrial

Trfbunal-cum-labour Court. New Delhi &

Anr.1980-11 LLN456.

ForPetitioner: Sh S. Ravindran. Advocate.

ForRespondents: Smt. Meera Gupta. Ms. R

Vaigaiand Sh. Anna Mathew."Advocates.

- 1

1074 Divisional Controller. G.S.R.C. v. C.J. Rana LLR I

press or implied. but does not include any tablishments Act. 1966. providing for treating I

such person who is employed in a mana- a fraction of a year exceeding six months as a

gerial or administrative capacity. or who year and a fraction of a year less than six

holds a civil post under the Central Gov- months as not a year. The contention that

ernment or a State Government. or who is was accepted by the learned Judge was that

subject to the Air Force Act. 1950 the the aforesaid explanation applies only for cal-

Army Act. 1950. or the Navy Act. 1957." culating the period for which gratuity is pay-

B. Section 2A defines continuous service. able and not applicable to the qualifying pe-

According to this section. if an employee ren- riod of years. The learned judge has probably

ders continuous service for a period of 240 relied upon the words. "for. which gratuity is

days in a year he will be deemed to have con- to be given." m. s. 40(1) of the Andhra Pradesh

, tinued in service for one year. This deeming Shops and Establishments Act. 1966. But

provision contained in S. ,2A must be applied this decision is not applicable to our case bein

interpreting the period of five years men- cause as stated above the definitions of "one

tioned in S. 4(1). Section 2(b) also supports year." "completed year," "continuous year."

this interpretation because as per the said under Ss. 2(aJ. 2(b) and 2(c) go to show that

section completed year of sen1ce means con- whenever year is mentioned in the enact-

-tinuous service for one year. Therefore. these ment, it must be taken as the year defined in

provisions are emphatic in stating that if the the aforesaid provisions. Another contention

employee serves continuously for a period of raised by the learned counsel for the peti-

240 days in a year. he must be deemed to tioner is that the petitioner-company ceased

have continuously served for one year. In this to exist after it was merged with MeUur

case ~dmittedly ~e third respondent has Beardsell, Ltd.. with effect from 1 January

served for 4 years, 10 months and 18 days. 10 1983. But this contention is untenable bemonths

and 18 days service is definitely more cause at the time of entennginto partnership

than 240 days. Therefore when the third re- the petitioner has not taken any undertaking

spondent was relieved from service he has from the employees that they will become emthus

completed five years of service. In the de- ployees of the new partnership firm MeUur

cision reported in Surendra Kumar Verma v. Textiles. and cease to be employees of the

Central Government Industrial Tribunal-cum- MeUur Beardsell. Ltd. But. as found earlier.

Labour Court. New Delhi. and Another the third respondent was relived only by the

(1980(2) LLN 456]. their Lordships have ob- petitioner. Therefore. I am not convinced with

served as follows. in Para. 13. at page 462: the contentions raised by the learned counsel

... It is sufficient for the purpose of S. for the petitioner. Hence the writ petition fails

25B(2)(a)(ti) that he has actually worked and it is dismissed. However, there will be no

for not less than 240 days. It is no longer order as to costs.

necessary fora workman to show that he

has been in employment during a preceding

period of twelve calendar months in

order to qualify within the terms of S.


The learned counsel for the petitioner relied

upon a case reported in P.Raghuvulu W1Sons

v. Additional Labour Court (1985 (1)LLN612).

A Single Judge of the Andhra Pradesh High

Court has held the service rendered for 4

years and 11 months and 10 days will not enable

an employee to avail gratuity. The said

case arises under the Andhra Pradesh Shops

and Establishments Act. 1966. The question

was whether as per Cl. (d)of explanation to S.

40(1) of the Andhra Pradesh Shops and Es-

1998LLR 1074


Hon"ble Mr. R. A. Mehta, J.

Special CivilApplication No. 11407 of 1994

Decided on 3.3.1998.

Divisional Controller, G.B.R.C.


C.J. Rana

Ashu Goel (Manager)     03 April 2013


I joined the organisation on 01.08.2006. Due to an accident on may 2007, I am unable to attend the office.In August. I am suffered financial crises , so i request to company for EPF amount, Company sending the r* letter for signature, I have no option , i have signed that letter and forward to company. I rejoined the company in 01.feb.2008 and left the organisation in 15/11/2012, So Please advice us, i am eligible to take the gratuity benefit or not, As i read the comments on forum 240 days working in fifth year, i have completed the period of 4 years 9 months 15 days, the person is eligible to take the gratuity benefit.Actually the employer is denied to give the gratuity amount but the company was received the gratuity from LIC gratuity fund, so please advice us or any legal procedure.  

Kumar Doab (FIN)     03 April 2013

@ Ashu Goel,


You would be doing a great help and service to fellow countrymen, citizens, employees, and companions at LCI by providing a few details and by putting in some effort in o/o LIC.

There are some threads in which the employees have posted that their employers have been denying to pay gratuity by blaming the LIC and claiming that LIC has declined to disburse the gratuity as employee has not completed 5 years ( 365 days/per year).

Kindly send the payment certificate issued by LIC in yur case or attach in this thread.

You have posted that:


“Actually the employer is denied to give the gratuity amount but the company was received the gratuity from LIC gratuity fund, so please advice us or any legal procedure.”


The action of the employer amounts to Fraud.

Your lawyer may opine that you can lodge a police compliant criminal case under 406,420.


First of all submit FormI under proper acknowledgement thru redg. post to company and follow up. If you have already submitted the form submit the copy to Controlling Authority of Gratuity. Do you have the POD/acknowledgment, with you?


Let the company deny in writing.


If it denies by phone record the phone call. Drive the discussion in such a manner that the calling person speaks out his name-dept-designation-address-your name-Emp. Code, and denial to pay gratuity.

The payroll dept. of your company can give the LIC gratuity policy number to you.


Payment of Gratuity Act, 1972

Section: 7
Determination of the amount of gratuity.

(2) As soon as gratuity becomes payable, the employer shall, whether an application referred to in sub-section (1) has been made or not, determine the amount of gratuity and give notice in writing to the person to whom the gratuity is payable and also to the controlling authority specifying the amount gratuity so determined.

{In your case the employer who has already received the gratuity from LIC , must have issued the notice to you, and must have paid the gratuity to you immediately upon receipt from LIC.}


(3A) If the amount of gratuity payable under sub-section (3) is not paid by the employer within……….. simple interest at such rate, not exceeding the rate notified by the Central Government from time to time for repayment of long-term deposits, as that Government may, by notification specify:

{It is felt the interest is @10%}



(a) If there is any dispute as to the amount of gratuity payable to an employee under this Act or as to the admissibility of any claim of, or in relation to, an employee for payment of gratuity, or as to the person entitled to receive the gratuity, the employer shall deposit with the controlling authority such amount as he admits to be payable by him as gratuity.

{ In your case there is no dispute. Rather there is clear intention to usurp the funds released for the social security benefit of employee.}


(c)] The controlling authority shall, after due inquiry and after giving the parties to the dispute a reasonable opportunity of being heard, determine the matter or matters in dispute and if, as a result of such inquiry any amount is found to be payable to the employee…………..


(5) For the purpose of conducting an inquiry…………..

(d) issuing commissions for the examination of witnesses.

Provided further that no appeal by an employer shall be admitted unless at the time of preferring the appeal, the appellant either produces a certificate of the controlling authority to the effect that the appellant has deposited with him an amount equal to the amount of gratuity required to be deposited under subsection (4), or deposits with the appellate authority such amount.]

Section: 8
Recovery of gratuity.


Section: 9

(2) An employer who contravenes, or makes default in complying with, any of the provisions of this Act or any rule or order made there under shall be punishable with imprisonment for a term which shall not be less than three months but which may extend to one year, or with fine which shall not be less than ten thousand rupees but which may extend to twenty thousand rupees, or with both:


You may approach P& G cell of the LIC. Obtain Gratuity policy number from company’s name/address, LIC log in id, and then you can even check on line.

You may seek help from Manager-CRM. These officials in CRM are usually very nice and co operative and reply in writing. Or escalate up to Chairman of LIC. Or chase thru RTI.

Please keep this thread updated.






Attached File : 556193873 paymentofgratuityact(1).doc downloaded: 165 times

Ashu Goel (Manager)     04 April 2013

Thanks for your advice, 

please clarifying the below mentioned point.....

Can i avail the benefit of gratuity.Actually after rejoined the organisation, EPF account is same and I have completed working period of 4 years nine month 15 days (Six  days working). employer said the term is five year, so please help me out for this confusion.

Ashu Goel (Manager)     04 April 2013

Thanks for your advice, 

please clarifying the below mentioned point.....

Can i avail the benefit of gratuity.Actually after rejoined the organisation, EPF account is same and I have completed working period of 4 years nine month 15 days (Six  days working). employer said the term is five year, so please help me out for this confusion.

Kumar Doab (FIN)     04 April 2013

You have posted that:

--“Actually after rejoined the organisation,………………..I have completed working period of 4 years nine month 15 days (Six  days working).’

If you have completed uninterrupted service of 4 years nine month 15 days, with 240 days of service in 5th year, you should be able to stake your claim, as already discussed in this thread.


“but the company was received the gratuity from LIC gratuity fund,”

Therefore company should disburse the amount to you, as already discussed in this thread.

You may submit FormI under proper acknowledgment.

Valuable advice of learned experts/members is sought.

Ashu Goel (Manager)     11 June 2013

i am file a claim form (form 1) under proper acknowledgement. employer not responds, what was the next action.......against employer 

Kumar Doab (FIN)     11 June 2013

Whole amount paid by LIC to your company is to be paid to you by your company.

You may go thru similar threads at:

The next step is to approach Controlling Authority of Gratuity which may be DLC in your local o/o Labor Commissioner.


You can rely upon :

Kerala High Court
Nedupuzha Service Co-Operative ... vs K.Rugmani,Aged 59 Years on 30 May, 2011
WA.No. 980 of 2010()

Which can be accessed at :{}
This judgment was also shared by LCI Expert Advocate Mr. M. Bhadra in the following thread:
The learned judges in the Honor’ble court decided:
‘employees are entitled to the maturity value of the gratuity policies’ as at7.

The extracts from the judgment are reproduced below:

The appellant Banks claim that the Policies are taken by them and their liability is limited to the statutory limit and excess gratuity amount received under the individual account of the employees over the statutory limit should go to the appellants. 

The employees, on the other hand, contend that they are entitled to the entire amount payable by the LIC for the policies taken by the appellant Banks. 
The learned Single Judges directed the appellants to pass on the entire benefits received from the LIC in the individual accounts of the employees to them. 
Besides W.A.Nos.980, 982 of 2010 & connected cases -6-this, none of the respondent employees have a case that the gratuity received by them under the Policies taken by the appellant Banks with the LIC is less than their entitlement for gratuity under the Act. 
This Court in the decision in Retnavalli v. Ambalapadu Service Co-operative Bank Ltd., reported in 2005(3) KLT 320, held that the circular is bad and the employees are entitled to maturity amount under the LIC policy, which may be in excess of the maximum gratuity 
W.A.Nos.980, 982 of 2010 & connected cases -7-provided under the statute under Section 4(3) of the Act. 5. In these batch cases, so far as the judgments under appeals are concerned, the learned Single Judges followed the above referred judgment of this Court and held that employees are entitled to the maturity value of the gratuity policies and the Banks are not entitled to withhold the same. 
We have already noticed that the terms of the LIC's Group Gratuity Scheme under the Policy offered by them are advantageous to the employees by virtue of the life insurance coverage and the guarantee even in the event of liquidation of the Society. However, we do not think the employers can claim the benefit of the Group Gratuity Policy taken by them for the benefit of the employees.
7. In W.A.No.1924/2010, learned counsel appearing for the respondent employees submitted that accumulated amount received from the LIC by the appellant Bank is more than what is paid to them. This is a matter for verification. 
Since the appellant's counsel disputed this position, there will be a direction to the LIC to furnish details of the accumulated W.A.Nos.980, 982 of 2010 & connected cases -11-amounts accrued in the account of the respondents i.e. passed on to the appellant, and if any amount in excess of the amount paid to the respondents was received by the appellant Bank, the same should be forthwith passed on to the respondents. 
The respondents can claim the amount based on the information received from the LIC.

Attached File : 773249467 nedupuzha service co-operative ... vs k.rugmani,aged 59 years on 30 may, 2011 (1).pdf downloaded: 69 times

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