I have some situations that are related to the payment of gratuity:
Situation No. 1: If an employee completed his/her five years of service in a company but he/she was on leave for one year and now, after one year, he/she resigned from his/her service. In this situation, is the company liable to pay gratuity for 5 years or for 6 years?
Situation No. 2: If an employee completed his/her five years of service in a company but he/she was on leave for 4 months in his/her 6th year of service and after 4 months he/she came and rejoined his/her service, is the company liable to pay gratuity for his/her leaves of 4 months or not?
And sorry - please don't judge me if I'm wrong in any situation.
From India, Gurgaon
Situation No. 1: If an employee completed his/her five years of service in a company but he/she was on leave for one year and now, after one year, he/she resigned from his/her service. In this situation, is the company liable to pay gratuity for 5 years or for 6 years?
Situation No. 2: If an employee completed his/her five years of service in a company but he/she was on leave for 4 months in his/her 6th year of service and after 4 months he/she came and rejoined his/her service, is the company liable to pay gratuity for his/her leaves of 4 months or not?
And sorry - please don't judge me if I'm wrong in any situation.
From India, Gurgaon
If the leave for one year was "unpaid leave" or "unauthorized absence" or an order treating the same as "break-in-service" was passed by the employer, then the employee will not be entitled to be paid gratuity for that year.
If the employee works for 240 days in any period of 12 months, the same is treated to be 'continuous service', hence even if he was on leave for 4 months, the period of 8 months will qualify him for gratuity for that year.
- S. K. Mittal
9319956443
From India, Faridabad
If the employee works for 240 days in any period of 12 months, the same is treated to be 'continuous service', hence even if he was on leave for 4 months, the period of 8 months will qualify him for gratuity for that year.
- S. K. Mittal
9319956443
From India, Faridabad
Dear friend,
I hope you agree with the presumption that the very description of your post indicates that "the leave" mentioned in both situations is authorized leave on loss of pay only and not unauthorized absence from duty involving disciplinary action under the service rules.
The gratuity contemplated under the Payment of Gratuity Act, 1972 hinges on two conditions, namely "Eligibility for gratuity" and "Entitlement to gratuity." Every employee staking their claim for gratuity under the Act upon the termination of their employment, other than by reason of death or disablement due to accident or disease, should fulfill these two conditions.
Eligibility for gratuity is attained by an employee by rendering not less than 5 years of continuous service in the same establishment on the date of termination of his/her employment.
Entitlement to gratuity for every year of continuous service is acquired by the employee by completing 240 days of service in a period of 12 calendar months as specified in sec. 2-A of the Act. Section 2-A introduces a legal fiction by recognizing certain interruptions in service as non-interruptions for the purpose of computing continuous service in a given block of 12 months or 6 months as the case may be.
If we critically analyze the definition under section 2-A, the interruptions deemed as non-interruptions for the purpose of the section are of two types: interruptions attributable to the employee, such as leave and absence from duty, which are not treated as breaks in service as per the rules of the establishment; and all other interruptions like accidents, sickness, layoff, strike, lockout, and other kinds of involuntary cessation of work are interruptions not attributable to the employee.
Therefore, when an employee remains on leave without wages for the entire year, they automatically lose their entitlement to gratuity for that particular year, though that year is taken into account for computing their eligibility for a minimum qualifying service of not less than 5 years.
On the other hand, if they remain on leave without wages for only 4 months in a period of 12 months, they are entitled to gratuity for the entire year as they would be completing 240 days of service in the remaining period.
From India, Salem
I hope you agree with the presumption that the very description of your post indicates that "the leave" mentioned in both situations is authorized leave on loss of pay only and not unauthorized absence from duty involving disciplinary action under the service rules.
The gratuity contemplated under the Payment of Gratuity Act, 1972 hinges on two conditions, namely "Eligibility for gratuity" and "Entitlement to gratuity." Every employee staking their claim for gratuity under the Act upon the termination of their employment, other than by reason of death or disablement due to accident or disease, should fulfill these two conditions.
Eligibility for gratuity is attained by an employee by rendering not less than 5 years of continuous service in the same establishment on the date of termination of his/her employment.
Entitlement to gratuity for every year of continuous service is acquired by the employee by completing 240 days of service in a period of 12 calendar months as specified in sec. 2-A of the Act. Section 2-A introduces a legal fiction by recognizing certain interruptions in service as non-interruptions for the purpose of computing continuous service in a given block of 12 months or 6 months as the case may be.
If we critically analyze the definition under section 2-A, the interruptions deemed as non-interruptions for the purpose of the section are of two types: interruptions attributable to the employee, such as leave and absence from duty, which are not treated as breaks in service as per the rules of the establishment; and all other interruptions like accidents, sickness, layoff, strike, lockout, and other kinds of involuntary cessation of work are interruptions not attributable to the employee.
Therefore, when an employee remains on leave without wages for the entire year, they automatically lose their entitlement to gratuity for that particular year, though that year is taken into account for computing their eligibility for a minimum qualifying service of not less than 5 years.
On the other hand, if they remain on leave without wages for only 4 months in a period of 12 months, they are entitled to gratuity for the entire year as they would be completing 240 days of service in the remaining period.
From India, Salem
Engage with peers to discuss and resolve work and business challenges collaboratively - share and document your knowledge. Our AI-powered platform, features real-time fact-checking, peer reviews, and an extensive historical knowledge base. - Join & Be Part Of Our Community.