Am I Eligible for Gratuity After Maternity Leave? Seeking Advice on Eligibility Criteria

Can anyone help me in knowing if I am eligible for gratuity? I joined a company in September 2008 and started my maternity leave from May 2013 to January 2014. I was on ESI leave. Am I eligible for gratuity?

To calculate the number of years of employment, an employee's date of joining and date of leaving are considered, and it has nothing to do with leaves availed. In the above case, the employee will be eligible for gratuity as they will leave after completing 5 years. By the way, are you asking the query out of curiosity, or are you planning to leave after your Maternity Leave?

You are 100% eligible for gratuity. Maternity leave has nothing to do with it.

In the case of calculating gratuity, only the date of joining and the date of leaving are considered. Maternity leave will be included in the calculation of gratuity payment.

Regards

Eligibility

Any employee who has rendered continuous service of not less than five years will be eligible for claiming gratuity under the Payment of Gratuity Act, 1972. The temporary/trainee period will also be eligible for the purpose of gratuity calculation, provided it is continuous in nature and not covered under the Apprentices Act, 1961.

Benefits

• The quantum of gratuity is to be computed at the rate of 15 days' salary based on the rate of salary last drawn by the employee concerned for every completed year of service or a part thereof exceeding 6 months.

Calculation of Gratuity

1. Gratuity = (Monthly Salary x 15 days x No. of years of service) / 26
2. The maximum gratuity payable under the Act is Rs. 3,50,000/- (w.e.f. 24-9-1997).
3. Any excess payment above the ceiling of Rs. 3,50,000/- will be taxable income in the hands of the employee.

Referring to the statutory provisions, an employee is eligible for gratuity if they have rendered continuous service of 5 years. In your case, the period of five years seems to be completing in September 2013. Assuming that you have rendered uninterrupted service from September 2008 to May 2013, the issue relating to continuous service arises only for the fifth year, i.e., September 2012 to September 2013.

An employee is deemed to be in continuous service if they have worked for over 240 days in a particular year. One of the exemptions for the calculation of the number of days present above is maternity leave up to 12 weeks. Therefore, in case you have worked for 240 days minus 2 weeks (12*6 = 72 days), i.e., 168 days, in the fifth year of service, you will be deemed to be in continuous service and be eligible for gratuity. If you furnish the exact dates, I will be in a better position to make calculations and determine your eligibility.

Hope that helps.

Regards

You have mentioned that you joined the company in September 2008 and you are intending to leave the company once your maternity leave is over. I presume that you are leaving the company by the end of January. I can guess the query that has arisen in your mind as to whether the maternity period you have availed is qualified for the calculation of 5 years.

Continuous Service and Gratuity Eligibility

In this connection, you are requested to refer to Section 2A of the Act, which deals with the definition of 'Continuous service.' It is clearly given in Sub-section 2(iv) that the total period of maternity leave not exceeding TWELVE WEEKS shall be counted for the purpose of the calculation of continuous service of 5 years for eligibility of gratuity.

In your case, you are availing maternity leave from May 2013 to January 2014, the whole period of which may not be counted for the purpose of gratuity payment. Though apparently, it looks like you have completed more than five years and maybe because of the same reasons most of my colleagues have given a positive nod for the payment of gratuity, I have a doubt, as yours is a marginal case. I, therefore, advise you to be cautious and work out the whole thing before putting up the papers.

Regards,
BS Kalsi

If you resign at this point without rejoining, you will not be eligible for gratuity because:

Eligibility for Gratuity

There is a provision of a minimum of 5 years' continuous service in the company, which is being interrupted in your case due to your leave. You have termed it maternity leave, but the whole period cannot be termed as maternity leave because this has been defined in the Act as a 12-week period (6 weeks prenatal and 6 weeks postnatal). Hence, the period of leave without pay will be deducted from the total period of service. If this period is less than 5 years within the meaning of the Act, you shall not be eligible for gratuity.

Secondly, it is most likely that you were not granted such a long leave, and you are continuing on unauthorized leave. In such a case, you have made yourself liable for disciplinary action, not a respectable sending-off. If you insist on gratuity and other claims, and the management becomes aware of your intent, they may set up an inquiry for unauthorized absence and even terminate your services.

Hence, if you want to leave, please leave with dignity.

Regards,
AK Jain

I read in a reply to this post that the gratuity amount is not linked to leave taken, such as maternity leave. Could you tell me if the employee has leave that they will encash at the time of leaving, does that have an impact on the gratuity?

Regards

I am sure that if you had read the thread thoroughly, you wouldn't have asked the question, "I read in a reply to this post that gratuity amount is not linked to leave taken (maternity leave)." You believed in the one-line reply of Sh. Andrew Rao mentioning that "YOU ARE 100% ELIGIBLE FOR GRATUITY. MATERNITY LEAVE HAS NOTHING TO DO WITH IT" in response to the query, but you did not bother to read the emails of Sh. CA Darshan Balai, Sh. AK Jain, including mine, which have clearly established the relation of maternity leave with the entitlement of payment of gratuity.

Gratuity and Leave Encashment

Regarding your other query mentioning, "if the employee has leave that they will encash at the time of leaving, does that have an impact on the gratuity?" The eligibility of gratuity has no relation to the encashment of leave; both are separate. The entitlement of both is dealt with under different enactments.

Regards,
BS Kalsi
Member since Aug 2011