Dear All, kindly do let me educate in regard to eligibility & calculation of Gratuity in below situation. As per Act, I consider 5 years continuous service for eligibility and 240 days for one completed year.
This is a general query : If "X" joined on 01.01.2009 &
If "X" worked for 1st Calendar year - 285 days;
If "X" worked for 2nd Calendar year - 300 days;
If "X" worked for 3rd Calendar year - 170 days only (due to LWP)
If "X" worked for 4th Calendar year - 299 days &
If "X" worked for 5th Calendar year - 242 days
Mr "X" is in continuous service without break. However, he resigned exactly after completion of 5 years service say on 02.01.2014.
Under such circumstances, whether "X" is entitle & eligible for payment of Gratuity & if so, to what extent?
Thanks for guidance in advance.
From India, Gurgaon
7This is a general query : If "X" joined on 01.01.2009 &
If "X" worked for 1st Calendar year - 285 days;
If "X" worked for 2nd Calendar year - 300 days;
If "X" worked for 3rd Calendar year - 170 days only (due to LWP)
If "X" worked for 4th Calendar year - 299 days &
If "X" worked for 5th Calendar year - 242 days
Mr "X" is in continuous service without break. However, he resigned exactly after completion of 5 years service say on 02.01.2014.
Under such circumstances, whether "X" is entitle & eligible for payment of Gratuity & if so, to what extent?
Thanks for guidance in advance.
From India, Gurgaon
According to Section 4(1) of the 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.
Further, the period of continuous service is to be reckoned from the date of employment and not from the date
of commencement of this Act . Mere absence from duty without leave can not be said to
result in breach of continuity of service for the purpose of this Act.
If the date of joining is on 01 Jan 2009 and has worked for five years, like you said for 242 days, the employee is eligible for gratuity. There is no doubt about it.
From India, Mumbai
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.
Further, the period of continuous service is to be reckoned from the date of employment and not from the date
of commencement of this Act . Mere absence from duty without leave can not be said to
result in breach of continuity of service for the purpose of this Act.
If the date of joining is on 01 Jan 2009 and has worked for five years, like you said for 242 days, the employee is eligible for gratuity. There is no doubt about it.
From India, Mumbai
Dear Mr. Brijendraji,
I really appreciate & thanks for your response. However, I still want some further clarification, keeping all above position intact, if the situation is slightly changed for working days of 3rd & 5th year, which is like that :
If "X" worked for 1st Calendar year - 285 days;
If "X" worked for 2nd Calendar year - 300 days;
If "X" worked for 3rd Calendar year - 242 days
If "X" worked for 4th Calendar year - 299 days &
If "X" worked for 5th Calendar year - 170 days only (due to LWP)
Is it the fit case for Gratuity, then?
From India, Gurgaon
I really appreciate & thanks for your response. However, I still want some further clarification, keeping all above position intact, if the situation is slightly changed for working days of 3rd & 5th year, which is like that :
If "X" worked for 1st Calendar year - 285 days;
If "X" worked for 2nd Calendar year - 300 days;
If "X" worked for 3rd Calendar year - 242 days
If "X" worked for 4th Calendar year - 299 days &
If "X" worked for 5th Calendar year - 170 days only (due to LWP)
Is it the fit case for Gratuity, then?
From India, Gurgaon
Even in the hypothetical case later presented, the eligibility for gratuity of the employee on a/c of his resignation on 02-01-2014 is not in dispute as he was on the rolls of employment of the employer ever since his joining on 01-01-2009 i.e for 5 years. Now, the pertinent question, therefore is whether he is ENTITLED to gratuity for all these 5 years or only for the first consecutive 4 years since the no of days he actually worked in the 5th is only170 days due to Leave without pay. Will the Questioner be kind enough to read once again in its entirety of Section 2-A of the Payment of Gratuity Act,1972 which defines "continuous service" for the purposes of the Act? For the purpose of entitlement of an employee to gratuity for a period, sub-section (1) of Section 2A creates a legal fiction in respect of the meaning of the term "continuous service" comprehended commonly out of the actual meaning the phrase conveys and sub-section (2) explains the fiction thus created. The fiction created by the Statute u/s.s(1) of S.2A is " Uninterrupted Service" inclusive of "certain interruptions" viz.,(1)sickness(2)accident(3)leave(4) authorised absence from duty without leave as per standing orders, rules or regulations in force (5) lay-off and (6)strike or a lock-out or cessation of work not due to any fault of the employee. Sub-section (2) of S.2A explains the fiction with reference to the no of days the employee concerned actually worked in the contingent of impossibility of notional reckoning of continuous service as stated previously. Here again, by the explanatory note to the ss, the absence of the employee due to permissible lay-off, authorised leave with full wages, temporary disablement caused by any employment accident and in the case of female permissible maternity leave are to be notionally included in the actual no of days worked.
Seems a bit confusing?
Actually not so, if one makes an isolated reading of the ss(1) at first for the purpose of determining continuous service for gratuity and then only proceeds further conjunctively with ss(2) only in the case of impossibility. In other words, in a period, if the employee's service remains uninterrupted inclusive of the specific interruptions mentioned therein ss(1) of sec.2A, he is straight away entitled for gratuity irrespective of the days he actually worked. Otherwise, you have to be on the look out for the minimum number of days actually he worked in the light of the explanation to ss.(2) of sec.2A to determine his entitlement.
Coming to your question, if the Leave Without Pay is permitted in the rules/regulations/standing orders of your establishment, he is entitled for gratuity for the 5th year though his actual no of working days is only 170. Otherwise, he is not entitled for gratuity only in respect of that year.
From India, Salem
Seems a bit confusing?
Actually not so, if one makes an isolated reading of the ss(1) at first for the purpose of determining continuous service for gratuity and then only proceeds further conjunctively with ss(2) only in the case of impossibility. In other words, in a period, if the employee's service remains uninterrupted inclusive of the specific interruptions mentioned therein ss(1) of sec.2A, he is straight away entitled for gratuity irrespective of the days he actually worked. Otherwise, you have to be on the look out for the minimum number of days actually he worked in the light of the explanation to ss.(2) of sec.2A to determine his entitlement.
Coming to your question, if the Leave Without Pay is permitted in the rules/regulations/standing orders of your establishment, he is entitled for gratuity for the 5th year though his actual no of working days is only 170. Otherwise, he is not entitled for gratuity only in respect of that year.
From India, Salem
Dear Umakanthan ji,
With your permission and with due respect to you sir, I would like to make correction in above quote. I am sure, it is an error inadvertently while typing.
The above quote should be:
he is entitled for gratuity INCLUDING for the 5th year though his actual no of working days is only 170. Otherwise, he is not entitled for gratuity only in respect of that year.
From India, Mumbai
With your permission and with due respect to you sir, I would like to make correction in above quote. I am sure, it is an error inadvertently while typing.
The above quote should be:
he is entitled for gratuity INCLUDING for the 5th year though his actual no of working days is only 170. Otherwise, he is not entitled for gratuity only in respect of that year.
From India, Mumbai
Korgaonkarji,
I accept your correction with thanks. Hope you will still remember the lengthy debate in this forum a year ago regarding eligibility criterion for gratuity based on the qualifying service of not less than 5 years. Since the learned friend who took a contrary view point cited the judgment by the Madrs High Court in Mettur Beardsel case, I stopped my further arguments in that thread with due respect to the view of the Hon'ble High Court of Madras based on the specific circumstance of the case in which the claimant ceased to be a employee (as the definition stood then)on the fag end of the 5th year consequent on his promotion though the claim arose after continuing his service under the same employer for some more years and the limited scope of applicability of a rule laid down by any High Court as well. Thank you once again.
From India, Salem
I accept your correction with thanks. Hope you will still remember the lengthy debate in this forum a year ago regarding eligibility criterion for gratuity based on the qualifying service of not less than 5 years. Since the learned friend who took a contrary view point cited the judgment by the Madrs High Court in Mettur Beardsel case, I stopped my further arguments in that thread with due respect to the view of the Hon'ble High Court of Madras based on the specific circumstance of the case in which the claimant ceased to be a employee (as the definition stood then)on the fag end of the 5th year consequent on his promotion though the claim arose after continuing his service under the same employer for some more years and the limited scope of applicability of a rule laid down by any High Court as well. Thank you once again.
From India, Salem
Dear Umakanthan ji,
Thank you so much for an enlightening. I would like you to intervene in the discussions in below given link:
https://www.citehr.com/520733-gratui...hen-years.html
From India, Mumbai
Thank you so much for an enlightening. I would like you to intervene in the discussions in below given link:
https://www.citehr.com/520733-gratui...hen-years.html
From India, Mumbai
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