Employee Resignation Dilemma: Should We Honor Service Continuity for Gratuity?

Dear Seniors,

One of the employees was transferred from one division to another after serving for 2 1/2 years. Now, in the current division, he has served for nearly 3 years. In the meantime, due to some financial problems, he withdrew his provident fund (PF) from the first division.

Now, he has submitted his resignation letter. He is requesting service continuity since his basic salary was nominal. Should we accept his request for service continuity and provide him with gratuity?

Please advise.

Regards,
Uday

I can't understand your meaning. Once again, I will clearly explain it to help.

Employee Transfer and Service Continuity

The employee joined in 2006 in one division, then he was inter-transferred to another division in 2008. However, his Date of Joining (DOJ) has remained the same, and he received salary slips with the same DOJ. The PF records also reflect the same DOJ. In 2010, he applied for settlement of the first division claim due to some financial issues.

Now, he has submitted his resignation letter and is requesting a service certificate for over 5 years. Can we accept and provide the service certificate and pay gratuity for him or not?

I assumed responsibility in 2011. I received a suggestion from a friend that upon receiving the claim from the first division PF, he is not considered to have a continuity of service and thus not eligible for gratuity.

Inquiry on PF Act Provisions

Is there any section in the PF Act that mentions "company services of any employee are not considered to be continued while withdrawing the PF claim from the first division"? Please let me know if there are any relevant sections in the PF Act.

Regards,
Uday

It is a well-known fact that the PF amount can only be settled once an employee has been separated from the services. This means that the service of the mentioned employee stands separated after his withdrawal of the PF amount, and his account has been closed by EPFO. In such a case, the employee will have a new PF account for his next tenure of service. It is the duty of the organization to clearly state to the employee about his discontinuity of service once the PF has been withdrawn.

I think it is a mistake on the part of the organization to have continued with the same Date of Joining (DOJ), and the employee will benefit from this. If service records show that he has completed 5.5 years of service in the organization, then I think the company has no other option but to give him gratuity.

Regards

Understanding PF Account Numbers and Service Continuity

I do not understand how there can be two PF account numbers for the same person. If it is an inter-transfer to another division, then the same PF number should have continued, and there is no question of withdrawing the PF from the first division. If it is a transfer with continuity of service, a person cannot withdraw their PF under any withdrawal rule of the PF Act. I think the organization has overlooked this.

In my opinion, since the date of joining is the same, the company has to pay gratuity if the individual fights for it.