Dear Friends,
I am reproducing the text of Sec 2A of the Payment of Gratuity Act. I need the following clarifications:
1. What is continuous service?
2. Suppose an employee joined a company on 16th Feb 1997 and left on 17th March 2002. His actual present days are:
- 180 days in 1997
- Above 240 in each year from 1998 to 2001
Is he eligible for gratuity? There is no service break.
2A. Continuous service.- For the purposes of this Act:
(1) An employee shall be said to be in continuous service for a period if he has, for that period, been in uninterrupted service, including service which may be interrupted on account of sickness, accident, leave, absence from duty without leave (not being absence in respect of which an order treating the absence as a break in service has been passed in accordance with the standing orders, rules or regulations governing the employees of the establishment), lay-off, strike, or a lock-out or cessation of work not due to any fault of the employee, whether such uninterrupted or interrupted service was rendered before or after the commencement of this Act.
(2) Where an employee (not being an employee employed in a seasonal establishment) is not in continuous service within the meaning of clause (1), for any period of one year or six months, he shall be deemed to be in continuous service under the employer:
(a) For the said period of one year, if the employee during the period of twelve calendar months preceding the date with reference to which calculation is to be made, has actually worked under the employer for not less than:
- One hundred and ninety days, in the case of any employee employed below the ground in a mine or in an establishment which works for less than six days in a week.
- Two hundred and forty days, in any other case.
(b) For the said period of six months, if the employee during the period of six calendar months preceding the date with reference to which the calculation is to be made, has actually worked under the employer for not less than:
- Ninety-five days, in the case of employees employed below the ground in a mine or in an establishment which works for less than six days in a week.
- One hundred and twenty days, in any other case.
Explanation: For the purpose of clause (2), the number of days on which an employee has actually worked under an employer shall include the days on which:
- He has been laid-off under an agreement or as permitted by standing orders made under the Industrial Employment (Standing Orders) Act, 1946 (20 of 1946), or under the Industrial Disputes Act, 1947 (14 of 1947), or under any other law applicable to the establishment.
- He has been on leave with full wages, earned in the previous year.
- He has been absent due to temporary disablement caused by an accident arising out of and in the course of his employment.
- In the case of a female, she has been on maternity leave; however, the total period of such maternity leave does not exceed twelve weeks.
(3) Where an employee employed in a seasonal establishment is not in continuous service within the meaning of clause (1), for any period of a year or six months, he shall be deemed to be in continuous service under the employer for such a period if he has actually worked for not less than seventy-five per cent. of the number of days on which the establishment was in operation during such a period.
COMMENTS
Mere absence cannot be said to result in a breach of continuity of service for the purpose of the Act; Kothari Industrial Corporation v. Appellate Authority (Deputy Commissioner of Labour), Karnool, 1998 LLR 223.
From India, Delhi
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108I am reproducing the text of Sec 2A of the Payment of Gratuity Act. I need the following clarifications:
1. What is continuous service?
2. Suppose an employee joined a company on 16th Feb 1997 and left on 17th March 2002. His actual present days are:
- 180 days in 1997
- Above 240 in each year from 1998 to 2001
Is he eligible for gratuity? There is no service break.
2A. Continuous service.- For the purposes of this Act:
(1) An employee shall be said to be in continuous service for a period if he has, for that period, been in uninterrupted service, including service which may be interrupted on account of sickness, accident, leave, absence from duty without leave (not being absence in respect of which an order treating the absence as a break in service has been passed in accordance with the standing orders, rules or regulations governing the employees of the establishment), lay-off, strike, or a lock-out or cessation of work not due to any fault of the employee, whether such uninterrupted or interrupted service was rendered before or after the commencement of this Act.
(2) Where an employee (not being an employee employed in a seasonal establishment) is not in continuous service within the meaning of clause (1), for any period of one year or six months, he shall be deemed to be in continuous service under the employer:
(a) For the said period of one year, if the employee during the period of twelve calendar months preceding the date with reference to which calculation is to be made, has actually worked under the employer for not less than:
- One hundred and ninety days, in the case of any employee employed below the ground in a mine or in an establishment which works for less than six days in a week.
- Two hundred and forty days, in any other case.
(b) For the said period of six months, if the employee during the period of six calendar months preceding the date with reference to which the calculation is to be made, has actually worked under the employer for not less than:
- Ninety-five days, in the case of employees employed below the ground in a mine or in an establishment which works for less than six days in a week.
- One hundred and twenty days, in any other case.
Explanation: For the purpose of clause (2), the number of days on which an employee has actually worked under an employer shall include the days on which:
- He has been laid-off under an agreement or as permitted by standing orders made under the Industrial Employment (Standing Orders) Act, 1946 (20 of 1946), or under the Industrial Disputes Act, 1947 (14 of 1947), or under any other law applicable to the establishment.
- He has been on leave with full wages, earned in the previous year.
- He has been absent due to temporary disablement caused by an accident arising out of and in the course of his employment.
- In the case of a female, she has been on maternity leave; however, the total period of such maternity leave does not exceed twelve weeks.
(3) Where an employee employed in a seasonal establishment is not in continuous service within the meaning of clause (1), for any period of a year or six months, he shall be deemed to be in continuous service under the employer for such a period if he has actually worked for not less than seventy-five per cent. of the number of days on which the establishment was in operation during such a period.
COMMENTS
Mere absence cannot be said to result in a breach of continuity of service for the purpose of the Act; Kothari Industrial Corporation v. Appellate Authority (Deputy Commissioner of Labour), Karnool, 1998 LLR 223.
From India, Delhi
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Dear Vikram,
Your question contains a reply itself about continuous service definition. While going through the case you presented, a similar situation occurred in my previous organization. However, when discussing with our legal advisor, he opined that the employee should be given gratuity if there is no service break, regardless of less than 240 days in the earlier year. If no action is taken against the employee, such as issuing a show cause and conducting a subsequent inquiry, the last year of working is essential for eligibility. In cases where an employee has worked less than 240 days in the 5th year of service, they should not be eligible to receive gratuity. Therefore, we have paid the amount to the employee.
I am sharing this experience, although there may be differing opinions between advocates and professionals.
Regards, Vipul S. Rana
From India, Thana
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Your question contains a reply itself about continuous service definition. While going through the case you presented, a similar situation occurred in my previous organization. However, when discussing with our legal advisor, he opined that the employee should be given gratuity if there is no service break, regardless of less than 240 days in the earlier year. If no action is taken against the employee, such as issuing a show cause and conducting a subsequent inquiry, the last year of working is essential for eligibility. In cases where an employee has worked less than 240 days in the 5th year of service, they should not be eligible to receive gratuity. Therefore, we have paid the amount to the employee.
I am sharing this experience, although there may be differing opinions between advocates and professionals.
Regards, Vipul S. Rana
From India, Thana
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Dear Vikram,
There are several judgments on gratuity. Please refer to the latest judgment. I don't remember the reference number of the judgment, but it was decided in one of the cases that while calculating 240 days of leave without pay or absenteeism, leave enjoyed, weekly off, and laid off, if any, should be taken into account.
However, the case is slightly different as it involves less than 240 days in the first year of service, whereas in the above case, the matter is to be decided based on last year's working days. Based on my knowledge, the employee is eligible for gratuity because the court will consider the main aim of the act, i.e., loyalty bonus for the long tenure of service with the organization.
Please add your comment on this.
Regards, Vipul S. Rana
From India, Thana
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There are several judgments on gratuity. Please refer to the latest judgment. I don't remember the reference number of the judgment, but it was decided in one of the cases that while calculating 240 days of leave without pay or absenteeism, leave enjoyed, weekly off, and laid off, if any, should be taken into account.
However, the case is slightly different as it involves less than 240 days in the first year of service, whereas in the above case, the matter is to be decided based on last year's working days. Based on my knowledge, the employee is eligible for gratuity because the court will consider the main aim of the act, i.e., loyalty bonus for the long tenure of service with the organization.
Please add your comment on this.
Regards, Vipul S. Rana
From India, Thana
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Dear Sir, My company is 5 years old. One female worker has left the company. I had to ask her not to come in anymore because she was frequently absent for 20 days without informing us every six months. I had warned her multiple times about this issue, but she did not heed my advice, so eventually, I had to let her go.
Attendance Record
Her attendance record from Diwali to Diwali is as follows:
2010 - 169 days
2011 - 295 days
2012 - 286 days
2013 - 250 days
However, in March, she left the job due to personal reasons, but in mid-April, she requested to rejoin, and I agreed. Unfortunately, her attendance did not improve, and in 2014, she only attended for 230 days. At that point, I informed her not to come back.
Gratuity Eligibility
My question is, is she eligible for gratuity? Please provide me with advice on this matter.
Thank you.
From India, Mumbai
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Attendance Record
Her attendance record from Diwali to Diwali is as follows:
2010 - 169 days
2011 - 295 days
2012 - 286 days
2013 - 250 days
However, in March, she left the job due to personal reasons, but in mid-April, she requested to rejoin, and I agreed. Unfortunately, her attendance did not improve, and in 2014, she only attended for 230 days. At that point, I informed her not to come back.
Gratuity Eligibility
My question is, is she eligible for gratuity? Please provide me with advice on this matter.
Thank you.
From India, Mumbai
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Gratuity-Contin uous Service-countin g broken period with same employer-Madras HC Judgment.docx
Less than 5 years service - Eligibility for payment of gratuity.pdf