Supreme Court Rulings on Gratuity, Continuous Service & EPF Damages

In recent landmark rulings, the Supreme Court clarified that under Section 2A of the Payment of Gratuity Act 1972, the requirement of 5 years of continuous service is satisfied if an employee has completed 240 days of actual working in each of the 5 preceding years, preventing technical forfeitures by employers.

• Payment of Gratuity Act 1972 applies to factories, mines, oilfields, plantations, ports, railway companies, and shops/establishments with 10 or more employees.
• Calculation formula under Section 4(2): (15 × Last Drawn Basic + DA × Completed Years of Service) ÷ 26.
• Maximum statutory gratuity ceiling stands at ₹20 Lakhs (and up to ₹25 Lakhs upon government notifications under SS Code).
• Under Section 14B of EPF & MP Act 1952, the Supreme Court reiterated that mens rea (guilty mind) is not an essential element for levying statutory damages for default in depositing PF contributions within the stipulated 15 days.