Gratuity Issue - Gratuity Issues - CiteHR
Madhu.T.K
Industrial Relations And Labour Laws
Kumaran Praveen
Hr-executive
Ashutosh Thakre
Hr Professional
+1 Other

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Hi seniors, I need one clarification regarding Gratuity. One of our employee worked totally nine years in the company. But she has absent during maternity period for one year. (including ESI leave 84 days ). My confusion is, whether I have to calculate the gratuity including the absent period? Can I calculate the gratuity for eight years only? expecting seniors suggestion.
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Hi Mr.Sundar,
Gratuity is usually paid to those employees how completed 5 years of continuous service. Here continuous service means (According to Gratuity Act-1972)
“Continuous Service” means uninterrupted service which may be interrupted on account of sickness, accident, leave, absence from duty without (not being treated as break in service), lay-off, strike, lock-out or cessation of work not due to the fault of the
employee. (Sec 2A).
from the above explanation of continuous service, I would say the employee who you mentioned above is eligible to get gratuity for 9 years if her one year maternity leave is not treated as break in her service.
With Regards
Mr.Thumbs Up
Maternity leave period of 84 days is certainly counted as days worked for the purpose of deciding continuous service for that year. But the period beyond that will be unpaid leaves and unless the said leaves without pay period are treated as approved leaves in her service records, she will lose one year gratuity because during the said year she would not have "actually worked' for 240 days or more. It is not necessary that all such leaves should be treated as approved leaves. Obviously, if the employee had interrupted service due to employment injury, the thing would have been different and in such occasion she would have been in continuous service for the year on which she was absent due to employment injury.

Normally, at the time of granting additional leave on without pay basis itself a consensus will be reached as to how it would be considered at the time of payment of gratuity by endorsing that " leave granted without pay on condition that these leaves will not be counted as days worked for the purpose of deciding the eligibility for and calculation of gratuity". Therefore, there is nothing wrong in disallowing one year gratuity in such cases.

Madhu.T.K
Dear Mr. Sundar,
Mr. Praveen and Mr. Madhu have given the very exact and practical answer to your query, I would only add that before you take that one year leave as break in service, make sure that there was an order passed in the period when the employee was on leave to the effect that the long unpaid leave would not be considered for Gratuity purpose.
If that order has not been passed with the employee in loop at that juncture, then the employee would be eligible for the Gratuity for the entire 9 years (including the leave without pay) as the order as not been passed.
Regards.
Ashutosh Thakre
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