Can Maternity Leave Count as Continuous Service for Gratuity if Employees Don't Return?

Dear learned and respected members,

I have a query regarding gratuity calculation related to maternity leave. I am an HR professional at a philanthropic charitable eye hospital where two of our nurses were on maternity leave last year during the ongoing Covid-19 pandemic, specifically in March/April 2021. From March to May 2020, we paid salaries to all staff members who were required to stay at home due to the pandemic. However, during that time, these nurses were on maternity leave under ESIC benefits. Now, after completing 26 weeks of maternity leave, they have submitted their resignation letters citing Covid-19 related issues. They have not reported back to work. They have requested their EPF, leave salary due, and gratuity. My question is, if a staff member does not return to work after maternity leave, can we consider the 26 weeks of maternity leave as continuous service for gratuity payment?

Your help and advice on this matter would be greatly appreciated.

Rajib Choudhury
West Bengal

Dear Colleague,

Your organization has been generous in extending salary to employees during the pandemic. When calculating "Continuous Service" to determine completed years of service, it is essential to include maternity leave days as such leave does not interrupt the service. To reach the required 240 days, you must incorporate the days as per Section 2A(1) of the Gratuity Act.

An employee is considered to be in continuous service for a period if they have been in uninterrupted service, including service that may be interrupted due to sickness, accident, leave, absence from duty without leave (excluding absence leading to a break in service as per the establishment's rules), lay off, strike, lock-out, or cessation of work not caused by the employee's fault. This applies to both uninterrupted and interrupted service rendered before or after the commencement of this Act.

Explanation: Under clause (2), the days an employee has worked under an employer include days when:

(i) They have been laid-off as per agreements or laws applicable to the establishment;
(ii) They have been on leave with full wages earned in the previous year;
(iii) They have been absent due to temporary disablement from a work-related accident; and
(iv) In the case of a female employee, maternity leave is taken into account, ensuring the continuity of service.

There is a specific provision to consider maternity leave when calculating continuous service days. Therefore, it is crucial to include this in the calculation.

Hi Rajib Choudhury,

Sir, everything is fine. However, if the concerned staff member "doesn't report and join at all" after 26 weeks and has submitted a resignation with a gratuity claim during enjoying leave, what will be the process of consideration for continuous service? I know that maternity benefits are well included under the term "continuous service," provided she "joins and resumes her duty."

Additional Maternity Leave Consideration

One thing that I did not mention previously is that during a special administrative meeting, the management reached a consensus that an additional "up to 1 year" maternity leave may be extended further after 26 weeks, considering the ongoing pandemic where mothers have to be safeguarded for their babies. Due to workload, the concerned staff members are being called to join now before the completion of the said period, with the sole decision of the management. However, when they are called to join, they are submitting resignations (2 female staff members had resigned) and claiming gratuity, indicating that they had not joined at all.

Contradiction in Continuous Service Definition

In this case, my immediate superior is contradicting the definition of the continuous service period. He insists that the last day of the service period will be her last day of biometric attendance only, and no further maternity leave period will be included as they had not joined at all later.

Please clarify, sir.

Regards,
Rajib Choudhury

Dear Rajib,

Simply put, your question is whether an employee can be permitted to resign on the expiry of the sanctioned leave without rejoining and be paid gratuity for the service rendered, including the last leave spell.

Eligibility of Leave and Gratuity

Any leave, irrespective of its length, is sanctioned only on the basis of the eligibility conditions. Particularly, maternity leave is an accrued statutory benefit based on the service rendered by the employee concerned prior to the occasion for it. Therefore, no additional condition of rejoining on its expiry can be imposed by the employer.

Gratuity Calculation Under the Payment of Gratuity Act, 1972

For the eligibility, entitlement, and computational purpose of gratuity under the Payment of Gratuity Act, 1972, the essential requirement is the length of continuous service that should be reckoned only backwards from the actual date of termination of employment and not the continuity of service. Therefore, your immediate superior's interpretation of continuous service by linking it to the employee's last attendance, whether it is biometric or otherwise, is not correct. Any authorized leave, whether with salary or not, shall be considered as duty only as long as the contract of employment subsists during the entire leave period, and it comes to an end if the employee resigns on the expiry of the sanctioned leave without rejoining.

Handling Over of Charge

The incidental question of handing over of the charge also does not arise as the employee was already on long leave of either 18 or 26 weeks at a stretch in the case of statutory maternity leave.

Of course, the employer can insist on the fulfillment of notice conditions by the employee as per the unilateral exit clause of the contract of employment for the acceptance of the resignation, but he cannot scrutinize the reasons for resignation otherwise.