How does your organization handle Gratuity eligibility for employees leaving at 4.8 years (4 years & 240 days)?
Anonymous HR Professional · 20 Aug 2026 · india · Technology · 11-50 employees
Under Section 4 of the Payment of Gratuity Act 1972, statutory gratuity requires 5 years of continuous service. However, landmark judicial rulings (such as the Madras High Court and Supreme Court precedents on continuous service under Section 2A) established that completing 4 years and 240 days in a 6-day week establishment (or 4 years and 190 days in a 5-day week establishment) legally constitutes continuous service for that 5th year.
What they have tried
We benchmarked policies across IT services, retail, and manufacturing sectors. While legacy enterprises routinely disburse gratuity at the 4.8-year mark upon employee representation, many startup and mid-market HRMS systems default to a rigid 5-year system lock.
Desired outcome
Input from HR compliance and payroll leaders on whether your company policy automatically recognizes 4 years and 240 days for gratuity settlement, or if it requires formal approval / 5 completed calendar years.
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