Ramesh, a monthly-rated employee drawing ₹30,000 per month, died in service after three years and eight months. His nominee claims gratuity; the employer denies it for want of five years' continuous service. Which one of the following is correct?

Section 53(1) ordinarily requires five years' continuous service, but its second proviso dispenses with that requirement where the termination of employment is due to death, disablement, expiry of fixed-term employment or a notified event; the gratuity of a deceased employee is payable on a pro rata basis (third proviso). Section 53(2) computes the amount at fifteen days' wages for every completed year of service, or part thereof in excess of six months, and Explanation 3 fixes the rate for a monthly-rated employee - wages last drawn divided by twenty-six, multiplied by fifteen. The eight-month fragment therefore counts in the computation, and the nominee, or failing nomination the heirs, is entitled. Insurance under section 57 secures the liability; it is not a condition of it.