Gratuity Calculation Dilemma: Should My Separation Date Be 2009 or 2014?

Request for Advice on Gratuity Calculation

All senior members, please give me advice on the following.

I was working in a public limited company and served for more than 25 years, rising to the post of Vice President. In May 2009, I was allowed by the director to avail long leave. Verbally, it was clarified that in my 25 years of service, I never applied for any leave in writing; it was always verbal/telephone only.

In November 2013, I decided to take my full and final payment, and the same was intimated by email. In response to my email, the company asked me to tender my resignation so they could close my account. In May 2014, they accepted my resignation and also informed me.

To make the payment of gratuity, the date of payment is considered May 2009, calculated within the limit of 350,000/-, whereas now the maximum is 1,000,000/- as per the new rules of 2010. I need advice on the matter. Should separation from employment be taken as May 2009 when I was allowed long leave by the director, or the date of my resignation accepted by management in 2014? Further, also advise me if the gratuity rule of 2009 or the revised rule of 2010 will be applicable for the calculation of my gratuity.

Thanks and regards,

Ashok Kumar Solanki

Your long leave has probably been treated as a break in service, and gratuity is paid at 2009 levels. Lack of written approval has led to this impasse.

Gratuity is payable until resignation under the Payment of Gratuity Act. Upon resignation, all admissibility as per the Act is to be determined under Section 4 of the Act.

Thanks,
Sushil

Dear Mr. Sushil,

Suppose in this case the verbal leave is treated as absence without permission. After all, everything is verbal and absence is treated as a break in service. What happens in such cases?

Dear Nathrao,

Absence without permission will have an impact on the determination of eligibility only and will not reduce the maximum amount of ten lakhs if the employee has become eligible to draw gratuity with five years of service in 2014. The emphasis is on the payment of gratuity upon resignation, superannuation, or termination. In Gandhinagar v Shobhnaben, the Gujarat HC held in 2010 that gratuity is payable until resignation.

Thanks,
Sushil

If in any anniversary year you have worked for less than 240 days, then as per the Act, you are not eligible to receive gratuity for that year.

Shrikant

After five years of continuous service, an employee is eligible for gratuity. In any year, if one has not completed 240 days of service, they are entitled to six months of service in that year. Please refer to the provision under section 4(2) of the Payment of Gratuity Act.

Information is inadequate:

1) What is the date of resignation?
2) Whether salary or any monetary benefit was paid to you from 2009 to 2014?
3) Was any notice served by any party of employment?
4) What is the status of the employment relationship between 2009 to 2013?
5) Whether PF contribution was made by the employer for this period of dispute?
6) In case the said period was leave, what type of leave was it - paid or unpaid, etc.?