Am I eligible for gratuity if I resign after 4 years and 8 months?

Question

I am resigning after working for 4 years and 8 months and want to know if I qualify for gratuity and how it is calculated. Specifically, I want to know how Payment of Gratuity Act 1972, Section 4 applies to a situation like mine and what the labour law position in India actually is. If there is a deadline I should be aware of, I need to know that now.

MyVakeel Legal Desk · Accepted Answer

Am I eligible for gratuity if I resign after 4 years and 8 months? is governed in India primarily by Payment of Gratuity Act 1972, Section 4 and Payment of Gratuity Act 1972, Section 2A. Outcomes in gratuity eligibility disputes depend heavily on documentation, so check what you can actually evidence as you read.

Section 4 requires 5 years of continuous service for gratuity eligibility on resignation, but Section 2A treats an employee who has worked 240 days in the preceding 12 months as having completed a year of continuous service, and courts have held that 4 years 240 days can qualify as 5 years for this purpose.

Gratuity is calculated as 15 days' wages (basic plus dearness allowance) for every completed year of service, using the formula: (last drawn salary x 15 x number of years) divided by 26.

The maximum gratuity payable under the Act is currently capped at Rs 20 lakh, though employers may pay higher amounts under a contractual or company gratuity scheme.

Gratuity must be paid within 30 days of it becoming payable, failing which the employer is liable to pay simple interest for the period of delay under Section 7.

An employee can be denied gratuity only on proven grounds of termination for riotous or disorderly conduct or an act constituting an offence involving moral turpitude, under Section 4(6), and even then only up to the extent of damage caused.

Practical steps: 1) Verify your total days worked in each of the last 5 years including approved leave to establish 240-day years; 2) Submit Form I to your employer applying for gratuity within 30 days of leaving service; 3) If denied, escalate in writing citing the 4 years 240 days precedent and Section 2A; 4) File a claim before the Controlling Authority under the Payment of Gratuity Act if the employer refuses payment.

If the other side has already issued a notice, filed a case or set a deadline, treat the matter as time-sensitive — remedies under Payment of Gratuity Act 1972, Section 4 carry limitation periods, and unexplained delay weakens an otherwise strong case. You can post the details on the MyVakeel forum for a practising advocate to review, or book a paid consultation with a Bar Council verified lawyer in labour law.