The five-year continuous service requirement is the cornerstone of gratuity eligibility. Courts have held that 4 years and 240 working days in the fifth year qualify as five years for the purpose of the Act. This means an employee who resigns before completing exactly five calendar years may still be eligible if they worked 240 days in the fifth year. Zoho Payroll uses the service start date to compute eligibility and can flag this edge case.
If an employee dies or becomes permanently disabled before completing five years, gratuity is still payable to the nominee or the employee. In these cases, the service duration restriction does not apply, and gratuity is calculated based on actual service. Zoho Payroll supports this exception in the final settlement calculation.
When processing an employee exit in Zoho Payroll, the system checks the date of joining, date of leaving, and service duration. If the employee meets the five-year threshold (or the death/disability exception), the gratuity payable amount is computed and included in the full and final settlement. If not eligible, no gratuity is computed.
Gratuity Eligibility in Zoho Payroll determines if an employee qualifies for gratuity under the Payment of Gratuity Act. The primary criterion is five years of continuous service. Zoho Payroll checks this during exit processing and computes the payable gratuity if eligible, including it in the full and final settlement.
Potentially yes. Courts have held that 4 years plus 240 working days in the fifth year satisfies the five-year condition. Zoho Payroll tracks the service dates, but employers should verify the working days count in the fifth year independently. If eligibility is confirmed, the gratuity amount can be manually entered in the final settlement.
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