Gratuity Dilemma: Should We Count 6 or 7 Years for an Employee with Health-Related Leaves?

We have an employee who completed 6 years and 7 months in the organization. However, due to some health issues, he has taken some leaves in the last 7 months. Our organization operates on a 5-day workweek.

The question arises: should we consider gratuity for 6 years or 7 years for this employee? Your guidance on this matter would be greatly appreciated. Please advise.

Dear Neha, a thorough reading of Sec. 2-A of the PG Act, 1972, which defines "continuous service" under the Act, would reveal that it requires only the number of days of unauthorized absence of an employee in a period of 12 months, which was declared by the employer as a break in service under an enabling provision of any service regulations, to be excluded from the computation of continuous service for entitlement to gratuity. Since you refer to the absence of some days in the last 7 months of his service as leave, it implies that such absence is authorized leave only.

Therefore, by rounding off, the employee becomes entitled to 7 years of gratuity under the Act.

But those leaves were approved, and it's not a break in service.

Maternity Leave and Continuous Employment

So, how will you deal with a person who is on maternity leave? Will you not consider it as continuous employment?

An employee completed 7 years and 7 months. (In the eighth year, he did not complete 240 days.) Will he be entitled to gratuity for 8 years?

The employee in question, who has completed 7 years and 7 months of service, is eligible for gratuity payable for 8 years. Six months and above service after completion of 5 years should be rounded off to 1 year. After completing a minimum of 5 years of service, the question of not completing 240 days does not arise.

Thank you.

As the employee has completed 6 years and 7 months, he is entitled to receive gratuity for 7 years. As you mentioned, he took authorized approved leaves. Therefore, after completing 5 years and 6 months, the service is rounded off to 1 year. Consequently, the employee is eligible to receive gratuity for 7 years.

Regards, Priya