Is gratuity Payable to Board Member or Director

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Hi All,

Have a query on gratuity eligibility and what’s payable?

Mr. S was the only employee when the company started its operations in India from 2005. He eventually happens to be the Board Member and one of the Director as well. Post 2022, the number of employees increased to 80. Now if this Mr.S resigns, is company liable to pay him gratuity calculating from 2005 or take it into account that gratuity came only into effect after 2022 with criteria of 10 or more. Please advise on this. Thank you.

Rgds,
Arsha (Still Learning…)

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2

Hi

He is eligible for Gratuity from 2005 it is based on number of years service only once completed 5 years he is eligible

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3

Thank you for the update.

Please let us know if an employee who completed 4 years & 6 months in a particular company is eligible for Gratuity rounded to 5 years.

Please share with us the Gratuity eligibility criteria for nongovernment companies like Private & public Ltd companies.

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Hi

As per Law the employee has to complete 5 years only then eligible for gratuity and if it is 5.6 years then u can round it to 6 years.
But unfortunately if anything happens to an employee and if he has completed 4.6 years then gratuity will be paid to the Nominee only due to special circumstances.

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Gratuity, under the Payment of Gratuity Act, 1972 (“Gratuity Act”) is calculated at the rate of 15 days’ wage for each year of completed service or part thereof in excess of six months. The term “part thereof in excess of six months is calculated as 120 days for establishments that work for 6 days a week and 95 days in any other case.

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