Gratuity - working in same company as CONTRACT hire and then as EMPLOYEE
7 months ago
Hi,
I have one query on GRATUITY. In current company (Bangalore, Karnataka) where I am working, I will complete 5 years on 1st Jan 2024 but I would like to exit by 10th Nov 2023. On searching internet, I am getting conflicting views, can someone throw some correct light on this
1. In my current company I was on CONTRACT hire from 5th Nov 2018 to 31st Dec 2019 (I was given contract HIRE from 5th Nov 2018 to 5th Feb 2019 but they gave me a new contract of EMPLOYEE from 1st Jan 2019 and I accepted the same) . Then in the same company I became EMPLOYEE from 1st Jan 2019 and my last date is probably going to be 10 Nov 2023. Will I be eligible for GRATUITY (I will be completing my 5 years if CONTRACT hire is also included)?
2. I heard about 240 day ruling by Honorable Madras and Honorable Kerala High Court for the fifth year, will this make me eligible for gratuity as I have already crossed 240 plus days as of now. Does this ruling of different state High Court apply for Karnataka state?
Can someone tell me if #1 and /or #2 will be applicable in my case for Gratuity? I would like to know specifically for both the cases independently i.e. #1 and #2.
Thanks
The Payment of Gratuity Act is applicable across the country including Bangalore, Karnataka, and the High Court ruling passed by the Madras High Court on the Central Act is applicable and can be cited across the country. A gratuity must be paid to an employee upon cessation of employment if he or she has rendered continuous service for five years or more, according to Section 4(1) of the Payment of Gratuity Act of 1972. Section 4(2) of the Act provides that for every completed year of service or part thereof in excess of 6 months, the employer shall pay gratuity to an employee at the prescribed rates. According to section 2A of the Act, an employee is said to be in continuous service for a period if he has for that period been in uninterrupted service including service which may be interrupted on account of accident, sickness, leave, absence from duty without leave, layoff, strike or a lock-out or cessation of work not due to any fault of employee. Further, according to section 2A(2)(b) of the Act, for the said period of six months, if the employee during the period of six calendar months preceding the date with reference to which the calculation is to be made, has actually worked under the employer for not less than -(i) ninety-five days, in the case of an employee employed below the ground in a mine or in an establishment which works for less than six days in a week; and (ii) one hundred and twenty days, in any other case. In view of the above proposition of law and precedents, when you rendered uninterrupted and continuous service for 5 years in an establishment including your contractual period, you are eligible for payment of gratuity from your employer.
The eligibility criteria for gratuity in India are governed by the Payment of Gratuity Act, 1972. Here are the key points to consider regarding your eligibility for gratuity:
Completion of 5 Years of Continuous Service:
To be eligible for gratuity, you must have completed a minimum of 5 years of continuous service with your employer. Continuous service means uninterrupted service under the same employer.
240 Days in the 5th Year:
As per Section 2A of the Payment of Gratuity Act, an employee is considered to have completed one year of service if they have worked for a minimum of 240 days in the 5th year. This means that if you have worked for at least 240 days in the 5th year, you will be eligible for gratuity even if you have not completed a full 5 years.
Now, let's address your specific situations:
Situation #1: Contract Hire and Employee Transition
In your case, if you initially joined as a contract employee on 5th Nov 2018 and later transitioned to an employee role on 1st Jan 2019 within the same company, the total service duration (including both contract and employee roles) is counted towards gratuity eligibility. Therefore, if you complete 5 years of continuous service, starting from 5th Nov 2018, you would be eligible for gratuity even if you resign on 10th Nov 2023.
Situation #2: 240 Days in the 5th Year
The 240-day rule is applicable, and it allows you to be eligible for gratuity if you have worked for at least 240 days in the 5th year of your employment. This rule is not specific to any state and applies uniformly across India. As long as you meet this criteria during your 5th year of service, you would be eligible for gratuity.
In summary, you may be eligible for gratuity under both situations. Ensure that you meet the 240-day requirement in your 5th year of service, and your combined service duration, including both contract and employee roles, should count toward the 5-year eligibility. It's advisable to confirm the details with your employer's HR department and seek clarification on your gratuity eligibility well in advance of your resignation date to avoid any disputes or misunderstandings.
Thank you.
A.4years 240 days is enough for claiming gratuity.
\\\"As per Madras High Court judgement in a case of Mettur Beardsell Limited [represented by its Personal Manager], Madras v/s Regional Labour Commissioner [Central Authority under the Payment of Gratuity Act, 1972], Madras, it has been stated that if an employee has rendered continuous service of 240 days in the fifth year of service then for the purpose of calculation of gratuity, it must be considered as if he has completed FIVE years of continuous service.\\\"
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