Long Absence and Gratuity: How Should HR Handle a 28-Year Gap Before Retirement?

Hi, I am an HR professional at a PSU. Recently, a peculiar case has come up. One employee, after 28 years of absence, has approached us for his terminal benefits, including Gratuity. No disciplinary action was initiated by the site office against him for his long absence. His scheduled date of retirement has also passed.

Please advise if his last pay for the computation of Gratuity would be considered as the pay he received last. Also, advise whether we can exclude the period of his absence when considering the continuous period of service, given the fact that the employer-employee relationship was not terminated before his scheduled date of retirement.

As this employee was on authorized leave (absence), the period of his absence should be excluded when considering the continuous period of service. His last wages given should be taken into account when 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 a 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 until 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, 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 timeframe fixed by the PG Act. However, you can take a chance on this.