Gratuity Calculation Dilemma: How Does Leave Without Pay Affect the Total?

Gratuity Calculation Query

Please help with gratuity calculations. An employee has worked for 5 years and 6 months, but within this duration, the employee has taken 2 months of leave without pay (LWP). What should we consider in the number of years during the calculation of gratuity?

To calculate gratuity considering the leave without pay (LWP), you should include the actual duration of service rendered by the employee. In this case, the employee worked for 5 years and 6 months but took 2 months of LWP. Therefore, for gratuity calculation purposes, the total service period would be 5 years and 4 months (5 years and 6 months - 2 months LWP). This adjusted service period should be used to determine the gratuity amount as per the applicable labor laws or company policies. It's essential to accurately account for periods of unpaid leave to ensure fair and compliant gratuity calculations.