It is often a case of ambiguity for employers to decipher eligibility of employees for the payment of gratuity under the Payment of Gratuity Act. The Act stipulates that gratuity shall be payable to an employee on termination of his employment after he has rendered continuous service for not less than 5 years. It is also payable on his superannuation or on his retirement or resignation or on his death or disablement due to accident or disease. Completion of continuous service for 5 years is not necessary where the termination of employment of the employee is due to death or disablement.
An employee is deemed to have continued in service for one year if he renders continuous service for a period of 240 days in that year. This requirement assumes that the establishment has a six day per week work pattern. In establishments which work for less than six days in a week, the employee shall be deemed to have completed one year continuous service if he has worked for 190 days in the year. Hence, in the former scenario, the employee would be required to work for at least 240 days in the fifth year, while in the latter scenario, the employee would be required to work for at least 190 days in the fifth year, to be to be eligible to receive gratuity on the basis that he has completed 5 years continuous service.
