Claim Of Gratuity On Attaining The Date Of Retirement After 28 Years Of Absence

Hi, I am a HR professional of a PSU. Recently, a peculiar case has come up. One employee, after 28 years of absence, has approached for his terminal benifits including Gratuity. No disciplinary action was initiated by the site office against him for his long absence. His schedule date of retirement has also gone past. Please advise, if his last pay for computation of Gratuity would be considered as the pay he received last and also advise, whether can we exclude the period his absence for considering the continuous period of service, given the fact that employer- employee relationship was not terminated before his schedule date of retirement.

As this employee was on authorised leave (absence), the period of his absence should be excluded for considering the continuous period of service.
His last wages given should be taken for calculating gratuity.
Regards,
Kamal

Dear Mr.Subrata

The post made by you makes me presume that you have not passed any order on the long absence of the worker in question. The worker’s rate of pay on the day of his last attendance has to be reckoned for the purposes of calculating the gratuity under the Payment of Gratuity Act. I invite your attention to section 2A of the Payment of Gratuity Act[as amended by the Payment of Gratuity (Second Amendment) Act in the year 1984]. According to this amended section the period of absence from duty could be excluded from reckoning the employee’s ‘continuous service’ only if an order imposing a punishment or penalty or treating the absence as break in service had been passed in accordance with the standing orders, rules or regulations governing the employees of the establishment. According to your post no such order had been passed till he claimed gratuity. Therefore, the period of his absence from duty has to be included in reckoning his continuous service for computing the amount of gratuity payable to him. Please check whether he has preferred the claim for gratuity with his employer within the time limit prescribed under the PG Act. If he had not so, then this could be one, though very tenuous, ground for refusing to pay gratuity. However, in case you refuse to pay gratuity on the ground of delay in making the claim, the counter argument will be that you also have failed to pay gratuity within the time frame fixed by the PG Act. However, you can take a chance on this.