Gratuity Eligibility Checker — Are You Entitled in 2026?

The Act applies to every factory, mine, oilfield, plantation, port, railway company, motor transport undertaking, shop, or establishment employing 10 or more persons on any day in the preceding 12 months. Once an establishment crosses the 10-employee threshold even for a single day, it is permanently covered — even if the headcount later drops to 5.

If your employer is not covered by the Act, you may still receive gratuity, but it is paid as an ex gratia or contractual benefit under a different formula — typically (15 × Salary × Years) ÷ 30 — and is at the employer's discretion.

Section 2(e) defines 'employee' broadly to mean any person (other than an apprentice) employed for wages in any kind of work, manual or otherwise, in or in connection with the establishment. The 2009 amendment removed the salary ceiling that previously excluded high earners, so today even C-suite executives are 'employees' for gratuity purposes.

Excluded categories include apprentices under the Apprentices Act, persons holding civil posts under central or state governments who are governed by separate pension rules, and members of armed forces (who receive DCRG separately).

The headline rule is five years of continuous service. Section 2A defines continuous service as uninterrupted service, including service that may be interrupted by sickness, accident, leave, lay-off, strike (not being an illegal strike), lockout, or cessation of work not due to the fault of the employee.

Where service is interrupted, you are still deemed to be in continuous service if, in the 12 months preceding the relevant date, you have worked under the employer for at least 240 days in a six-day-a-week establishment (or 190 days in a five-day-week establishment, or a mine).

In Mettur Beardsell Ltd. vs Regional Labour Commissioner (1998), the Madras High Court held that an employee who has completed 4 years of continuous service plus 240 working days in the fifth year is deemed to have completed 'five years of continuous service' for the purposes of Section 4(1). This view has been followed by most labour courts across India and is the standard interpretation accepted by HR departments.

Practical implication: if you resign at 4 years 8 months in a typical Monday-to-Friday corporate job (which works roughly 240 days in any 12-month window), you are very likely eligible for gratuity. Always cross-check by counting actual working days, excluding paid leave taken without working from home.

Section 4(1) proviso states that the five-year requirement does not apply in case of death or disablement due to accident or disease. If an employee dies even one day after joining, the full gratuity amount is payable to the nominee. Similarly, if an employee suffers a disabling injury, gratuity becomes payable immediately based on the salary and service at the time of disablement.

This makes the Form F nomination, which every new employee should file within 30 days of joining, an extremely important document for the protection of the family.

Once the five-year condition is satisfied, gratuity is payable irrespective of how you leave the organisation. The Act lists four modes: superannuation (retirement at the contractual age), retirement or resignation, death or disablement, and termination of services. Disciplinary termination for misconduct can result in partial or full forfeiture only if specific procedural conditions in Section 4(6) are met.

A common misconception is that resigning forfeits gratuity. It does not. Whether you resign voluntarily for a better job, are laid off in a workforce reduction, or your fixed-term contract simply ends, gratuity is payable as long as you crossed the eligibility threshold.

When an employer transfers an employee to a sister or group company, the question of whether prior service counts depends on the transfer letter. If the transfer letter expressly states that past service will be counted for gratuity, the years are added. If the employee is asked to resign and rejoin, the clock typically restarts unless a tripartite agreement preserves service.

In mergers and acquisitions, Section 25FF of the Industrial Disputes Act and Schedule provisions usually protect past service. A well-drafted scheme of arrangement will explicitly state that prior service counts for gratuity under the transferee employer.

• Is your employer a factory, shop, or establishment with 10+ employees? — Yes / No
• Will you have completed 5 years (or 4 years 240 days) of continuous service on the exit date? — Yes / No
• Are you classified as an 'employee' (not apprentice or government servant)? — Yes / No
• Is the reason for exit one of: resignation, retirement, death, disablement, or termination (not for proven misconduct)? — Yes / No
• If all four answers are Yes — you are eligible for gratuity.