Is Gratuity Payable for 55 Months of Work Despite a 5-Year Service Period?

Respected HR experts,

Gratuity Eligibility Case

I found a different case of gratuity. A person was recently asked about gratuity upon resigning from his job.

Tenure Calculation

I am sharing his tenure calculation:
Date of Joining: 17.11.2016
Date of Exit: 30.11.2021
Service Years: 5.04 years (from DOJ to DOE)

Attendance Details

- F.Y. 2016-2017: 4 months
- F.Y. 2017-2018: 11 months
- F.Y. 2018-2019: 12 months
- F.Y. 2019-2020: 10 months
- F.Y. 2020-2021: 10 months
- F.Y. 2021-2022: 8 months (up to 30.11.2021)

So, the total work months are 55 months, which means 4.6 years. However, the service period is 5.04 years (including absence).

Please tell me if he is eligible for gratuity or not?

Dear Pankaj, I think that you have to recheck your calculation.

Gratuity Calculation

From the actual date of joining, i.e., 17-11-2016, till the actual date of relieving on resignation, i.e., 30-11-2021, as per your post, the employee's total length of continuous service, including absence, if any, would be exactly 5 years and 13 days only. The number of days of unauthorized absence, if any, has to be included in the continuous service for gratuity, if not already declared as a break in service as per the standing orders or service regulations of the establishment. For the purpose of computing continuous service under the Payment of Gratuity Act, 1972, you may refer to section 2-A of the Act.

Therefore, the employee is eligible and entitled to gratuity for 5 years of continuous service.

From the data given in the query, it is amply clear that the workman has completed 'continuous service' of more than 5 years and is eligible for gratuity. This is so because absence from duty without leave (not being absence in respect of which an order treating the absence as a break in service has been passed in accordance with the standing order, rules, or regulations governing the employees of the establishment) is to be treated as continuous service as per Section 2A of the PGA 1972.

There is a similar case with a friend of mine where, after a period of 4 years and 8 months, there are very flawed HR policies that favor management over employees. The employee had a minor quarrel with his superior and did not use any abusive language nor engage in violence, but HR labeled the language as "unprofessional" and suspended him for 15 days. After that, he continued in service for 3 more years. When the employee rejoined, there was no change in employment status, nor was he terminated and rehired. However, the company argues that it resulted in a break in service, and therefore he is not eligible for gratuity. Is there any legal validity in this?

Mere break in service is not sufficient to deny gratuity in an otherwise continuous service. As per Section 2A, service, though interrupted, has to be counted unless an order treating the absence as a break in service has been passed in accordance with the standing orders, rules, or regulations governing the employees of the establishment. According to the query, such an order has not been passed, and the facts show there is continuity, so the employee has every right to claim gratuity.