I worked in a company for 4 years and 7 months. Am I eligible for gratuity? (2024)

-Name withheld.

Section 4(1) of The Payment of Gratuity Act, 1971 (‘the Act’) provides that gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than 5 years in the following cases:

(a) on his superannuation, or

(b) on his retirement or resignation, or

(c) on his death or disablement due to accident or disease

Thus, in accordance with the Act, an employee is eligible for gratuity only if he/she has completed 5 years of service with an organization. These 5 years must be continuous and there should not be any gap in the services of the employee with that company. However, the condition of completion of continuous service of 5 years shall not be necessary where the termination of the employment of any employee is due to death or disablement. Moreover, "completed year of service" would mean continuous service for 1 year and an employee shall be said to be in continuous service for a period if he has been in uninterrupted service, including service which may be interrupted on account of sickness, accident, leave, absence from duty without leave, lay off, strike or a lock-out or cessation of work not due to any fault of the employee.

Further, it is to be noted that the Madras High Court in the case of Salem textile case (2011) had concluded that an employee would be eligible for gratuity even if he has completed 4 years 240 days. Thus, in accordance with this decision, the employee would be eligible for gratuity on completion of 240 days and the need not complete the entire 5th year of service to be eligible to gratuity. However, the said decisions would be restricted to the state of Tamil Nadu only and may not apply to the rest of the India and hence, it is litigative. Thus, there is a possibility that legal authorities may take a view which may differ from the aforementioned Madras HC decision.

Accordingly, it is always recommendable to check with the employer organization with respect to their legal stand on the point of period of interruption services on account of sickness, accident, leave, lay-off, strike, lock-out, or cessation of work which is not due to any fault of employee, which may be considered in the computation of 5 years.

Query answered by Dr Suresh Surana, founder, RSM India. Send your queries at mintmoney@livemint.com

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Published: 29 Jan 2022, 04:29 PM IST