India HR Forum

Symbiosis Institute of Telecom Management, Asia’s finest Telecom Business School, is organizing a Business Management Conclave “Conexion'10” to be held on the 21st August, 2010. “Conexion’10” aims at bringing together eminent people from HR Professionals, Academicians, Researchers and Management Consultants on a common platform to explore various aspects of the theme: Integration, Integrity, Innovation: The Trinity for inclusive and sustainable growth.
“Conexion’10” will be focusing on contemporary business issues revolving around:
• Cross-cultural organizations
• Effects of Mergers, Acquisition & Amalgamation
• Upholding Integral Values
• Current & Future trends in talent management

The definition of continuous serivce under the grautity act was amended with effect from 11-2-1981 and a new section 2A was introdudced wehere by an employee is deemed o be in continous service for a period of one year, if he has worked for 240 days during the period of 12 calendar months preceding the date with reference to which the gratuity is to be calculated. For example: An employee joined the service on 1-1-2000. He continued to work till 31-8-2004 and thereafter he resigned from the service with effect from 1-9-2004. Thus he has worked for eight months and eleven days during the period from 1-1-2004 to 31-8-2004 which comes to 243 days, he is deemed to be in continous service for one year and thus deemed have worked for five years.
Case Law: Mettur Beardsell Ltd. V. Regional Labour Commissioner (central) Madras (Madras High Court) 1998 LLR. In this case the employee worked for four years, ten months and fourteen days which implies that he rendered more than 240 days of service in a period of one year and hence 240 days of service in a period of one year and hence he is deemed to have completed five years of service.

This and many such situtions in varioius Labour Laws are covered in our CD 'common errors and precautions in Labour Mangement' - For more information log on to our webiste: www.chipinbiz.com.

Gratuity »
In terms of Section 4 of the Payment of Gratuity Act 1972, gratuity is payable to an employee on termination of his employment after he rendered continuous service for not less than five years.
(1) Common error: Computing continuous service wrongly
However some employers may carry the impression that an employee has to work every year fully during the five year period and consequently deny gratuity to the employee who completed less than five years (say four years and ten months) on the ground that he did not complete five years of continuous service. This is erroneous.
(2) Consequence
If gratuity is denied erroneously to such employees, they can file an application under Sec7(4) of the gratuity Act before the Controlling Authority for recovery of the same who can direct the employer to pay gratuity along with interest at the rate stipulated by the government for the delayed payment.
(3) What is the correct understanding of the concept of continuous service?
The definition of continuous service under the Act was amended with effect from 11-2-1981 and a new section 2A was introduced whereby an employee is deemed to be in continuous service for a period of one year, if he has worked for 240 days during the period of 12 calendar months preceding the date with reference to which the gratuity is to be calculated.
Example:
An employee joined the service on 1-1-2000. He continued to work till 31-8-2004 and thereafter he resigned from the service with effect from 1-9-2004. Thus as he worked for eight months even during the period from 1-1-2004 to 31-8-2004 which comes to 243 days, he is deemed to be in continuous service for one year and thus deemed to have worked for five years.
(4) Case law
a)      Mettur Beardsell Ltd. v. Regional Labour Commissioner (central) Madras (Madras High Court) 1998 LLR page 1072.
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15/07/2010
In this case, the employee worked for four years, ten months and eighteen days which implies that he rendered more than 240 days of service in a period of one year and hence he is deemed to have completed five years of service.
This case is an instance where ignorance of law would wrongly deprive an employee to a benefit that he is entitled to under law.

Interestingly, the whole details are available in our CD 'Common errors and precautions in Labour Management'. If you like to have more information on this log on to our website: www.chipinbiz.com

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Hi,

I want to know, can an employee be eligible for gratuity after service of 4yrs 10months??

I have researched and heard there was a judgment passed by Supreme Court on the same.
Can you please help me on this issue.??

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