Gratuity eligibility: do you actually qualify?
Every bank and fintech has a gratuity calculator that asks for “years of service” and assumes you qualify. This one answers the question people are actually searching — including the 4-years-and-a-bit case nobody handles honestly.
Am I eligible for gratuity in India?
You generally need five completed years of continuous service with the same employer, at a covered establishment — under the Payment of Gratuity Act 1972 if you left before 21 November 2025, and under the Code on Social Security 2020 if you left on or after it. The five-year threshold is the same either way. The requirement does not apply where employment ends through death or disablement.
The case everyone actually searches for is four years and a bit. The rounding rule you may have read about — six months or more counts as a full year — applies to the gratuity amount, not to eligibility, so 4 years 7 months does not become 5 years. There is a separate and genuinely contested argument that four years plus 240 days qualifies, built on how the Act defines continuous service. Courts have gone both ways. The checker below tells you which of the three positions you are in, and the exact date you would cross each threshold.
- Estimated time
- About a minute
- Cost / impact
- Free · no signup · runs in your browser
- What you need
- Joining date, last working day, employment type
Gratuity eligibility checker
Do you actually qualify? Most calculators skip this and assume you do.
Key takeaways
- →Five completed years of continuous service is the general threshold — counted strictly, with no rounding.
- →The "six months rounds up" rule applies to the amount, not to eligibility. This is the single most common mistake.
- →Death or disablement waives the minimum-service requirement entirely.
- →Four years plus 240 days is genuinely contested. Claim it anyway — the downside of asking is nil.
- →Resignation qualifies. Gratuity is not limited to retirement or termination.
The eligibility rules in plain English
Which law governs your gratuity depends on when you left. Exits before 21 November 2025 fall under the Payment of Gratuity Act, 1972. Exits on or after that date fall under the Code on Social Security, 2020, which came into force that day. The five-year threshold is the same under both; what changed is fixed-term employment and the definition of wages used to calculate the amount. Eligibility turns on three questions, in this order:
- 1Is your establishment covered? The Act generally applies to establishments employing ten or more people. Below that, gratuity may still be payable as a contractual benefit — many employers pay it regardless — but it is a contract question rather than a statutory one.
- 2Have you completed the required service? Five completed years of continuous service with the same employer. Completed means completed: four years and eleven months is four years for this purpose.
- 3Does an exception apply? Where employment ends through death or disablement, the minimum-service requirement does not apply.
This page answers eligibility. The amount is a separate step. Once you know you qualify, the gratuity calculator works out what you are owed, and tax on exit payments works out how much of it is exempt.
What “continuous service” and the 240-day rule actually mean
Continuous service does not mean you were never absent. The Act treats an employee as being in continuous service for a year if they worked a minimum number of days in the relevant twelve months, which allows for leave, layoff and certain other absences without breaking the chain.
| Situation | Days needed in 12 months |
|---|---|
| Establishment working six days a week | 240 days |
| Establishment working fewer than six days a week | 190 days |
| Employment below ground in a mine | 190 days |
One important caveat about the checker above: the statutory test counts days actually worked, with certain absences treated as worked. The tool can only see your joining date and last working day, so it counts calendar days elapsed. For most salaried employees the two are close enough to be useful. If you have had a long period of unpaid absence, your worked-day count will be lower than the figure shown.
The four-years-and-a-bit question, presented as contested
Genuinely unsettled — we are not giving you a yes or a no
Whether four completed years plus 240 days in the fifth year satisfies the five-year requirement is one of the few genuinely open questions in Indian employment law that affects ordinary employees directly. You will find confident answers in both directions online. Most of them are overstated.
The argument for eligibility
It runs through section 2A of the Act, which defines continuous service. Section 2A(2) is a deeming provision: an employee who works the required number of days in a twelve-month period is treated as being in continuous service for that period. On that reading, a fifth year in which you crossed the day threshold is a completed year of continuous service, and the five-year requirement is met.
This is the reasoning the Madras High Court accepted in Mettur Beardsell Ltd v. Regional Labour Commissioner (Central), where an employee with 4 years, 10 months and 18 days of service — the final period exceeding 240 days — was held to have completed five years of continuous service for gratuity purposes.
Why it is still not settled
Mettur Beardsell is a Madras High Court decision. It is persuasive and widely followed by labour tribunals, but it does not bind other High Courts, and the position is not uniform across jurisdictions. There is no single national determination resolving it for everyone, and outcomes have turned on the specific facts and on how the provisions were read together.
Note also the wording of the test: section 2A counts days actually worked, not calendar days elapsed. An employer disputing a claim will look there first.
What we suggest you actually do
Claim it anyway, and escalate if refused. Submitting a gratuity claim costs you nothing, does not prejudice the rest of your settlement, and forces your employer to take a position in writing. Plenty of employers pay in this situation without argument. The downside of asking is nil; the downside of assuming you do not qualify is that you never find out.
On citations: Mettur Beardsell is cited because we have traced it to the judgment itself, not to a secondary summary. It remains a single High Court decision rather than settled national law, so if the amount is material take your day count to a professional who can check the position in your jurisdiction.
Situations that change the answer
Death or disablement
SettledThe minimum-service requirement does not apply where employment ends through death or disablement. Length of service does not bar the claim.
Fixed-term employment
SettledFixed-term employees qualify after one year of service under the contract, not five. The Ministry of Labour & Employment confirmed this in its FAQs on the labour codes: an FTE is eligible if they render service under the contract for a period of one year from the start of the contract. It applies to exits on or after 21 November 2025; for earlier exits the position was genuinely unsettled, and the one-year rule does not apply retrospectively.
Contract or agency staff
SettledContract labour engaged through a contractor is not fixed-term employment, so the one-year rule does not apply — the ordinary five-year test does. The contractor, not the principal employer, carries the liability to pay. Establishing who your actual employer is remains the first question.
Transfer between group companies
Fact-dependentWhether service carries across depends on how the transfer was documented. If your service was expressly treated as continuous, that matters — find the letter.
If your employer refuses
Both frameworks work the same way in outline: you apply to your employer, and if the claim is rejected or ignored there is a dedicated forum, separate from a general wages claim. What changed on 21 November 2025 is the name of the forum and the statute you cite. For an exit on or after that date it is the competent authority under sections 56 and 58 of the Code on Social Security, 2020. For an exit before it, it was the controlling authority under the Payment of Gratuity Act, 1972. Citing the wrong one invites an easy deflection. Practically, the sequence that works is:
- 1Submit a written claim Use your employer's process, and keep a dated, acknowledged copy. This document is what every later step relies on.
- 2Get the refusal in writing Ask specifically for the reason. An employer that has to write down why it is refusing often reconsiders.
- 3Hold them to the statutory duty to determine and notify Under s.56 of the Code the employer must work out the amount as soon as gratuity becomes payable and give written notice of it both to you and to the competent authority — not only to you. Payment is due within thirty days, and late payment carries simple interest at the notified rate.
- 4Apply to the competent authority (or, for a pre-21-Nov-2025 exit, the controlling authority) Where the amount, your eligibility or the entitlement is disputed, the employer must deposit the admitted amount with the authority, and either side may apply to have the dispute determined. It has the powers of a civil court for the inquiry, and its proceedings are judicial proceedings.
- 5Appeal within sixty days if the order goes against you Extendable by a further sixty days for sufficient cause. An employer appealing must first deposit the gratuity amount or produce the competent authority's certificate showing it has been deposited.
The steps above come from the Code itself. The forms and the time limit for the initial application sit in rules made under it, and the interest rate on delayed payment is notified separately — confirm all three before you file. Missing a limitation period is an avoidable way to lose a valid claim.
Related tools
Frequently asked questions
Is 4 years 7 months eligible for gratuity?+
Is 4.5 years eligible for gratuity?+
What is the 240 days rule for gratuity?+
Is gratuity applicable to contract employees?+
Do I get gratuity if I resign?+
What if my employer refuses to pay gratuity?+
Sources for the figures on this page
Authority holding that 240 days worked in the fifth year is deemed continuous service, satisfying the five-year gratuity requirement
Madras High Court. Persuasive, not binding nationally — other High Courts have not uniformly followed it.
View sourceChecked 2026-08-11
Forum for a gratuity dispute, for an exit on or after 21 November 2025 — the competent authority, not the controlling authority
Code on Social Security 2020, s.56 (determination of amount of gratuity: employer must determine and notify the employee and the competent authority, pay within thirty days, pay simple interest on delay; disputes determined by the competent authority; appeal within sixty days, extendable by sixty) read with s.58 (appointment of the competent authority by the appropriate Government). For exits before 21 November 2025 the equivalent route was the controlling authority under the Payment of Gratuity Act 1972.
View sourceChecked 2026-08-14
Written and reviewed by Deepak Middha, Chartered Accountant (ICAI, India) and founder of LayoffNext.
Deepak Middha is the founder of LayoffNext and a Chartered Accountant (ICAI, India). A U.S. immigrant with nearly 20 years of experience — and 17 years in hedge fund and private equity administration, including as Vice President of Fund Accounting at NAV Fund Administration Group and Associate Director of Private Equity and Real Estate at SS&C Technologies — he builds free, plain-language layoff tools and guides for employees, H-1B workers, and immigrant families.