Employees can receive gratuity before five years

Salaried employees can receive gratuity under the Payment of Gratuity Act after working for at least five years. However, there is an exception. Employees may also qualify if they have worked for at least 4 years and 240 days. Gratuity calculation is based on an employee's final salary and follows specific guidelines. Employees in organizations covered by the Act become eligible for gratuity after completing 4 years and 240 days of service, not just five years. This means that someone who started work on January 1, 2021, can receive gratuity if they leave after August 29, 2025. Continuous service is important. According to the Act, employees must work 240 days in the year to be considered as having completed a year of service. Those in certain industries, like underground mines, may qualify after 190 days. If an employee serves more than 240 days in their fifth year, their total service is counted as five years. Employees who leave before reaching the 4 years and 240 days mark are not eligible for gratuity. However, if the employee leaves due to death or disablement, the five-year requirement is waived. Gratuity payments are calculated differently depending on whether the organization falls under the Act. For those covered by the Act, the formula used is: (15 x Final salary x Years of service) / 26. If an employee has worked more than four years and 240 days, they can calculate their gratuity based on this formula. For employees not covered by the Act, gratuity is calculated as half a month's salary for each completed year of service. The formula in this case is: (15 x Last salary x Completed years) / 30. Both methods ensure that employees receive a fair gratuity amount based on their time spent in the company.