But according to the Gratuity Act, of 1972, an employee can claim their gratuity if they have worked for 4.5 years.
Gratuity, a financial acknowledgement bestowed by companies to their departing employees, has emerged as a crucial aspect of the employment landscape. However, misconceptions surrounding the eligibility criteria often lead to confusion for both employers and employees. In light of this, let’s delve into the Gratuity Act of 1972 to demystify the nuances of this benefit.
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Typically, gratuity is extended to employees who have rendered at least five years of service with a single company. However, contrary to common belief, the Gratuity Act presents a provision that allows an employee to claim gratuity even if their tenure falls within 4.8 years or less.
Consider a scenario where an individual seeks to transition to a more promising job prospect, nurturing hopes that their current employer will honour their years of commitment with gratuity. The twist emerges when the company cites the 5-year threshold, as sanctioned by law, to deny gratuity owing to the employee’s comparatively shorter service. In such a predicament, employees hold the right to assert their claim to gratuity, referencing the very statute that governs this aspect.
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According to the Gratuity Act, gratuity payment hinges on three conditions. Firstly, an employee should complete a minimum of five years in the company before embarking on their departure. Secondly, if the company follows a 5-day workweek schedule, gratuity becomes applicable after a service period of 4 years and 190 days. Thirdly, in companies adhering to a 6-day work week, gratuity can be claimed upon completing 4 years and 240 days of service.
Aditya Chopra, an advocate from a distinguished Mumbai-based law firm, highlights a key aspect of section 4(2) of the Gratuity Act. He underscores that if an employee completes 4 years and 6 months of uninterrupted service within a single establishment, they are entitled to gratuity under the provisions of the Payment of Gratuity Act 1972.
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It’s imperative to note that gratuity is not limited to the instance of voluntary departure. Situations of an employee’s demise, incapacitation due to accidents or illnesses, and retirement also warrant gratuity claims. In these scenarios, the employee’s tenure need not reach the mandatory five-year benchmark. Moreover, the Act extends the provision to withdraw gratuity at the time of retirement, further enhancing the financial cushion for retiring individuals.
It is essential to clarify that interns or temporary employees, due to the nature of their engagement, are not eligible for gratuity benefits.
