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Ask Money Today: Am I eligible for gratuity payment before completing 5 years of service?

Ask Money Today: Am I eligible for gratuity payment before completing 5 years of service?

As per the Payment and Gratuity Act, an employee should render five years of continuous service with the existing employer to become eligible for gratuity

The Payment and Gratuity Act applies to all factories, mines, oilfields, plantation, ports, and railways The Payment and Gratuity Act applies to all factories, mines, oilfields, plantation, ports, and railways

Q: I have just found a new job. I have completed 4 years and 7 months with my existing employer. My understanding is if someone completes more than 4 years and six months with an employer, she becomes eligible for gratuity, but the HR told me it has to be 4 years and 240 days. Is the HR correct? What am I missing?

-Nupur Kaura

By Sahil Arora - Director, Paisabazaar.com

The Payment and Gratuity Act applies to all factories, mines, oilfields, plantation, ports, and railways. In addition to this, it also applies to every shop and establishments employing 10 or more people.

As per the Act, an employee should render five years of continuous service with the existing employer to become eligible for gratuity. However, Section 2A of the same Act, defines the term 'continuous service' under which many of those who have not worked continuously for five years also become eligible for gratuity.

Those working in underground mines or those working with organisations working for less than 6 days in a week would be deemed to have completed 5th year of service if they had already worked for 190 days continuously since the end of 4th year of his employment, making him eligible for receiving gratuity.

In case of employees working with other organisations, this period is 240 days.

If you were not an underground mine worker or if your company did not have a weekly work schedule of less than 6 days, you would be eligible for gratuity only after completing 4 years and 240 days of employment. I would suggest you to continue working for at least another month with your existing employer to become eligible for the gratuity. Remember that notice period served by you would also be factored while calculating the period of your 'continuous service'.

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