Gratuity and Approved Leave Without Pay: Can I Include LWP Months in My Claim?

I have been working as an Assistant Professor at a private university for 14.5 years. After completing 5 years of continuous service, I have taken a total of 25 months of Leave Without Pay (LWP) for personal reasons in different years, all duly approved by the organization. I am already eligible for gratuity, but the organization has not included the LWP months in the calculation. Can I claim gratuity for the LWP months as the leaves were approved?

In my opinion, it won't actually. The company is kind enough not to consider that a "break" in service, unlike some fraudulent establishments that do so. If they delve into those technicalities, your gratuity amount can decrease further because the first instance of eligible gratuity will be calculated for the initial five years. The "wage" would then take into account the last drawn salary at the end of those five years and independently calculate the remaining period as a fresh employment.

Hi, If those leaves are approved, then that period should also be considered for Gratuity. I hope that for the periods of leaves without pay, you obtained separate approval from your employer for each period. If the employer had officially approved the leaves (even without salary), then they should be taken into account for Gratuity calculation.

Leave Without Pay, being sanctioned leave, will be treated as part of the 240 days for calculating eligibility for Gratuity. Management should be asked to rework Gratuity.

Hi Lakshmi, In clause 2, section (ii) under continuous service, it actually states that "(ii) he has been on leave with full wages, earned in the previous year;" for the purpose of calculating the number of days worked. Engaging in an argument with the employer who has not discounted years with less than 240 days of service for calculating "continuity," but only discounted them from the total number of months, could result in other consequences, don't you think? What if they argue that the 6th year was a "break" in service and consider only the initial five years as "continuous" service?

Thank you.

Hello, In reference to the above, please go through the Payment of Gratuity Act, 1972, Section 2A - Continuous service for better and transparent results.

The days of loss, even if approved, shall not be considered for the payment of gratuity.

Regards, R R Kapoor

Vadodara

Dear friends,

The provisions of a beneficial legislation like the Payment of Gratuity Act, 1972 should be liberally interpreted to serve the very objective and purpose of the Act.

Understanding the Payment of Gratuity Act

A dispassionate analysis of the provisions of sections 2-A and 4, read with the preamble of the Act, would reveal that payment of gratuity under the Act is not linked to the factor of "continuity of service" by the employee but to his/her rendering of a certain length of continuous service in every year, computed backwards with reference to the date of actual termination of employment. I am afraid that Mr. Monkey Singh's latest remarks emanate from the isolated interpretation of the term "continuous service," which should, in fact, be in conjunction with the provision of section 4(1) of the Act.

Defining "Continuous Service"

In this regard, while defining the term "continuous service," section 2-A (1) of the Act introduces a legal fiction by which certain specified interruptions/breaks are not to be treated as interruptions/breaks in service for the purpose of the Act. Out of the specified interruptions not to be deemed as such, two, viz., leave and 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 orders, rules, or regulations governing the employees of the establishment) are the ones directly attributable to the part of an individual employee.

Quantifying Continuous Service

Section 2-A (2) quantifies the length of such continuous service in a given period of 12 months/six months as the case may be in respect of certain establishments. Of course, the explanation to ss(2) includes leave with wages earned in the previous year only to amplify the phrase "actually worked." But it does not take away the "leave" mentioned in the defining clause of ss(1) of section 2-A, for the term 'leave' would imply "leave of absence," which may be with or without salary or wages.

It is also noteworthy that the 25 months of LWP was not at a stretch but in different spells falling across several subsequent years.

Conclusion

Therefore, these 25 months of approved leave on loss of pay should be included in the continuous service rendered for the purpose of the calculation of gratuity under the Act. In case of denial, the poster can file a claim u/s 7(4)(b) of the Act before the Controlling Authority.