Understanding Continuous Service for Gratuity: How ESI Leave Affects Eligibility?

Dear HR Professional Colleagues,

I am Vijay, working as an HR Executive in a Manufacturing company. Our organization was registered under the Factories Act, 1948. The Payment of Gratuity Act is also applicable to our organization. One of our employees has completed 58 years of age and is ready for retirement. His Date of Joining is 01.02.1991, and he has completed 19 years of service. During these 19 years of service, there was one year where he did not complete 240 days due to ESI leave. In that year, his actual present days were 210 days, with 65 days on ESI leave. In this regard, my question is whether he is eligible for 18 years or 19 years for the payment of Gratuity, and I seek some clarifications on this topic.

1. What is the meaning of Continuous service as per the Payment of Gratuity Act, 1972? Which days are calculated, and which days are not calculated?

2. Is ESI leave considered as continuous service?

3. Are W.Off's and holidays considered as continuous service?

4. Are LOP's and absences considered as continuous service?

5. Are suspension days considered as continuous service?

I request all to provide the above information and share your knowledge to help me rectify my problem. I would be very thankful if you could cite any Supreme Court judgments on this topic.

Thanking you,

Vasireddy Vijay

Email: vasireddyvijay360@gmail.com

Dear,

ESI leaves should be considered in continuous service. In your case, it is 19 years (i.e., consider ESI leaves also). In the case of ESI leaves, ESI has paid him partial salary; then why should it not be taken into continuous service? It has to. Even W-offs and suspension are considered as continuous service. Even holidays are taken into consideration as they are paid holidays (if I am not mistaken).

Regards,

Rajeev Dixit
(9901436213)

Dear Vijay,

In your case, it will be 19 years for the calculation of gratuity if your company has the practice of not considering sick leaves as a break in service. Please go through your company's precedence and service rules (if any).

Regards

Dear,

It has been 19 years. If he was on sick leave, then it will be counted as 240 days. If due to an accident there was a break in service, then only it will not be counted.

Regards,
J. S. Malik

Dear Vijay,

If he was on leave on ESI, which is also countable, if an employee completed more than six months (or more than 120 working days) in a year, we will consider it as a complete one year. In your case, it should be 19 years.

Best Regards,

Sajid Ansari

Hi Vijay,

The employee is entitled to gratuity for 19 years. SL or LWP will not be counted as a break in service as per Sec-2A continuous service of the Gratuity Act.

Best regards,
Govil

Hi senior,

Absent without sanctioned leave and being suspended (as punishment) will be counted in continuous service? Please advise.

Thank you,
Sachin

Hello sir,

In the Gratuity Act, 5 years of continuous service is required for eligibility for gratuity. Up to 3 Lakhs, the gratuity amount is Rs. 3500. Continuous service includes sick leave or ESI leave, but if any accident occurs, it is not included because it breaks the continuity of service.

Regards,
Malsidha Deshmukh
Student Trainee
Karve Institute of Social Service,
Karvenagar, Pune
MSW-LWPMIR/HRM.

Guys, please note that if you are marking someone's attendance as present or absent, it clearly means they are on the company's rolls. Unless they have disassociated themselves through resignation or other means, as long as they are shown as part of the organization, you cannot consider it a break in service. Therefore, it should be counted as 19 full years and not 18 years.

Hi, Vijay.

What I feel is, depending on the duration of the leave and the reason behind it, is very important. If during this duration he was without any pay coming to Gratuity for the leave duration, it should not be considered. Gratuity is something eligible for those who have worked during the whole service period.

In the Labour Law, I guess it says:
"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 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."

Hi,

The period in which he remained on ESI leave (sick leave) should be treated as continuous service, and he is eligible for gratuity benefits for 19 years.

Regards,
Sivadasan

Dear Vijay,

Keeping in view the details given by you, the concerned employee will be entitled to payment of Gratuity for 19 years and not 18 years since he has, although not completed 240 days in that particular year, completed more than 6 months of continuous service (exceeding 120 days). Moreover, he was under ESI where he must have received partial salary from ESI for the duration (65 days) he was under treatment.

Best Regards

GL SONI
+919811681671

Dear all,

Section 2-A of the PG Act stipulates that for the calculation of continuous service, the period of uninterrupted service includes sickness, accident, leave, absence (except in cases of a break in service), layoff, strike, lockout, or cessation of work not due to the fault of the employee. Therefore, the various contingencies mentioned in your query such as ESI leave, absence, suspension, etc., cannot prevent an employee from receiving gratuity for that period.

Hope this clarifies.

Regards,
KK Nair