Understanding Gratuity Eligibility: Does a 15-Day Absence Count as a Service Break?

Dear sir,

One employee has been absent continuously for 15 days. He has incurred a loss of pay for those 15 days. Is this considered a break in service and interrupted service under the Payment of Gratuity Act, 1972? Is he eligible for gratuity under section 2A? Can the employer refuse to provide gratuity for him?

Please clarify.

Thanks with Regards,
T. Thirumurugan.

If the 15 days loss of pay is not regularized, then this will be deemed to be an interruption of service. In other words, if 15 days of LOP is due to any reason that he has no leave to his credit but the employer has sanctioned it as LOP without any remarks, then this will be treated as a break in service. This 15 days' LOP will not count as a break in service.

Dear colleague,

No, LOP will not be treated as a break in service. Service is only broken when it is terminated by either party. In this case, if the person has worked for 240 days in a year, he will earn the Gratuity for that year despite his LOP.

Regards,
Vinayak Nagarkar
HR Consultant

Continuous Service Under Section 2A of the PoGA 1972

Section 2A of the PoGA 1972 defines Continuous Service. A perusal of the said provision would answer your question. Section 2A states that absence from duty without leave (i.e., permission) cannot ordinarily be considered as an interruption in service. However, where the establishment passes an order treating such absence (i.e., without permission) as a break in service, and where such order is in accordance with the standing orders, rules, or regulations governing the employees of the establishment, the said absence would amount to interrupted service.

Dear colleague,

If any establishment passes such an order, it is unjust and open to challenge in the court of law. LOP without authorization may warrant disciplinary action, but treating it as a break in service or interrupted service is far-fetched. I would like to know if any establishment has such a condition in their S.O.s or in terms of employment.

Regards,
Vinayak Nagarkar
HR Consultant

Unauthorized Absence and Break in Service

The number of days of unauthorized absence indulged in by an employee may be treated as a break in service or service interrupted for the purpose of reckoning continuous service under the Payment of Gratuity Act, 1972. Provided that the employer should issue an order in writing to the absentee employee stating that the concerned spell of absence (duration of absence) is being treated as a break in service or service interrupted. This should be done each time an employee remains unauthorizedly absent from work. Further, there should be an enabling proviso in the certified standing orders of the organization/industrial establishment to the effect of passing such an order. Alternatively, a proviso to this effect being incorporated in the company's rules and policies duly open and published to the employees by way of a general notification or letter of appointment will be sufficient to pass an order in writing.

In the absence of any such orders being issued, the employer cannot automatically construe a break in service/service interrupted for any spell/periods of absence (even if the absence period may be two or three years) and deny gratuity on the grounds that the employee has not rendered continuous service for those periods. In other words, the employee can claim gratuity even for the period of absence spanning two or three years. In fact, I have a proviso incorporated in the certified standing orders of one of the organizations I worked for, enabling the employer to deny gratuity for those years where an employee failed to render continuous service as envisaged under the Payment of Gratuity Act, 1972, arising out of the absence of an employee, leading to an order being passed to treat the employee's absence as service interrupted/break in service.

Regards, P. Senthilkumar (senprithvib6)