In continuation to what KK has said, I would like to say that leaves beyond the permitted leave as available in the credit of leave book would normally be unpaid leave. If the unpaid leave is granted, for whatever reasons, the same should be marked in the service as break of service or continuous service. In the absence of this, there could be confusions with regard to the treatment of leave period (unpaid leave period) for calculation of Gratuity. Under the Payment of Gratuity Act, in order to be entitled to gratuity one should have continuous service and a person is said to have continuous service only when he has 240 days' service in every 12 months. If there are unpaid days, the same would not counted in 240 days. BUT unpaid leaves which are approved and regularised and against which there is no undertaking between the employee and the employer regarding its treatment for break in service will be considered as days worked and would qualify fr gratuity. It may happen that an employee availing one or two months unpaid leave may be in good terms and you grant it as approved leave without any condition but after some years he may become a headache for the organisation and when he leaves he would naturally demands his gratuity. At that time, the question often asked is how to treat his absence? If you had an undertaking while granting two months' unpaid leave that the leave would not be counted as continuous service, then you are safe and you can show your Board that you had proactively done it and as such he would not get gratuity because there is no continuous service.