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Gratuity payment is effective after 5 years of service

The Payment of Gratuity Act, 1972, was enacted to provide for gratuity payment to employees engaged in factories, mines, oilfields, plantations, ports, railway companies, shops or other establishments. (Photo: Mint)Premium
The Payment of Gratuity Act, 1972, was enacted to provide for gratuity payment to employees engaged in factories, mines, oilfields, plantations, ports, railway companies, shops or other establishments. (Photo: Mint)

  • As per current provisions, gratuity payment is effective after completion of five years of service. This is expected to change under the new labour code wherein an employee will be eligible for gratuity after completion of 1 year of service

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I worked for a company for 4 years and 4 months. Can you please confirm whether I am eligible for gratuity payment or not. Can you also share the new circular on gratuity eligibility and the process to claim it - Avik Mitra

Answer by Jay Jhaveri, partner at Bhuta Shah & Co.

As per current provisions, gratuity payment is effective after completion of five years of service.

This is expected to change under the new labour code wherein an employee will be eligible for gratuity payment even after completion of 1 year of service. However, implementation of the same has been postponed till 1 October, and is expected to be delayed until the beginning of the next financial year. The detailed guidelines and processes for the same are also expected to be revised.

Under current rules, if an individual is in continuous service for 1 year or 6 months under the employer, he shall still be eligible to receive gratuity payout only if he for the said period, preceding the date with reference to which calculation is to be made, has actually worked under the employer for not less than 190 days and 95 days, respectively (in case of five-day work week in a company).

Since you have not worked for the company for at least four years and 190 days, you will not be eligible to receive gratuity.

(Send your queries to mintmoney@livemint.com)

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