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Gratuity Eligibility

An employee is eligible for payment of gratuity if [ section 2 ]:-

He/she rendered the continuous service for five or more than five years on the termination of his employment :-
  • On his superannuation; or
  • On his resignation or retirement; or
  • On his disablement due to disease/accident or death. (continuous service of five years is not applicable in this case)
Here meaning of an employee [ section 2(e) ]:-
  • Any person (not apprentice)
  • Employed on salary or wages
  • Employed in any factory, establishment, mine, plantation, oilfield, port, shop or Railway Company.
  • To do any work (i.e., manual supervisory, non technical, technical, unskilled, semiskilled, skilled, managerial, officer or clerical)
  • Whether the terms of employment are implied or expressed.
  • Whether or not he is employed in an administrative or managerial capacity.
Here meaning of Superannuation [ section 2(r) ]:-
  • The attainment by the worker/employee of such age
  • As defined in service conditions and contract.
  • As the age on attainment of which the worker/employee shall vacate the service/employment.
Here meaning of continuous service [ section 2A ]:-
  • uninterrupted service which may be interrupted due to accident, sickness, absence for duty without any leave, leave, lay-off, lock-out, strike or cessation of work (due to not any fault of the employee) are considered as continuous service.
  • Whether such interrupted or uninterrupted service was rendered after or before the commencement of the Act.
  • If in case employee is not in continuous service of one year, he/she shall be deemed to be in continuous service of one year if; he/she has, immediately preceding twelve colander months, worked under the employer for not less than –
    • 190 Days (in case of employee employed in mines below ground)
    • 190 Days (in case if employee employed in an establishment which works for less than six days in a week)
    • 240 Days ( in any other case)
  • If in case employee is not in continuous service of six months, he/she shall be deemed to be in continuous service of six months if; he/she has, immediately preceding six colander months, worked under the employer for not less than –
    • 95 Days (in case of employee employed in mines below ground)
    • 95 Days (in case if employee employed in an establishment which works for less than six days in a week)
    • 120 Days ( in any other case)
  • If an employee of seasonal establishment is not in continuous service of twelve or six months, he/she shall be deemed to be in continuous service of twelve or six months; if he/she actually worked for not less than seventy five percent of the number of days on which the establishment was in operation during such period.
  • Note: Following days shall be included while calculating the actual worked days of an employee:-
    • Employee has been laid-off under an agreement.
    • Employee has been on leave with full wages.
    • Employee has been absent to his duty due to temporary disablement caused by an accident arising out of and in the course of his employment.
    • Maternity leave for female employee, not more than twelve weeks.
Gratuity shall be paid to :-
  • The Employee
  • Employee’s Nominee (if deceased employee had made a nomination)
  • Employee’s Legal heir (if deceased employee had not made any nomination)
  • If case of minor legal heir or nominee, the amount of gratuity shall be deposited with controlling authority. Controlling authority deposit/invest the gratuity amount in a financial institution or bank for benefit of minor, as may be prescribed, until such minor attains majority.