Is My COVID Pause Period Counted for Gratuity? Seeking Advice on Employment Gaps

Hello Team,

Greetings of the day. This is Raj Kumar, and I am from Himachal Pradesh. I have some questions regarding gratuity.

I joined a company in Delhi named MCI GeTS India in July 2017 and worked offline until April 2020. Then, during the COVID period, the company sent an email to some employees, stating that they were putting them on pause for some time and would call them back once the industry reopened.

Another email came a few days later from our office, mentioning that if someone wanted to do freelancing, they could pursue it. There was no clear indication in the email that we were no longer employees of the company.

After a long time, I resigned from the company in December 2023. Now, the company is saying that my last day was April 2020, and the COVID period will not count as there was no work, no pay, and no PF contribution.

Can you advise me if the COVID period will be considered in the gratuity calculation?

Please advise.

Regards,
Raj

Hi,

Employment status between April 2020 and December 2023

Between April 2020 and December 2023, what was your employment status? Did you receive a fixed monthly salary or a variable salary based on assignments? I assume your employer might have removed you from the payroll by April 2020 and considered you as a freelancer. However, even in that case, your employer should have informed employees about their exit by April 2020.

Proving continuous employment

I am not sure if you contributed work to your organization online on a daily basis or once in a while. Did you mark attendance on a daily basis? With so many questions, it might be challenging to prove your continuous employment with the employer until December 2023. To claim gratuity, you must prove 5 years of continuous employment with the employer without any breaks in employment.

Hello Sir,

Thank you for getting back. Let me explain the situation. We received an email from the company in July 2020 stating that some employees would be placed on pause positions due to the COVID period, as the company did not have business.

The company put us on a "no work and no pay" option and did not contribute to the PF. Additionally, the company sent another email shortly after, informing us that if someone wanted to do freelance work or join another organization, they could assist with company exit formalities. However, the company did not explicitly state in the email that we were no longer employees of the company.

There was no communication between myself and the company regarding resignation or termination until December 2023. Therefore, I considered myself still an employee of the company and did not seek employment elsewhere.

Now, the company is stating that my last day was in April 2020, but they did not clearly inform me that I was no longer an employee of the company.

Please advise.

From the description given, I understand that there was no individual communication of termination of employment post-July 2020. There was a general communication stating that the company is terminating some employees. However, it is unclear who is covered under the term "some employees." Moreover, the company has not initiated any retrenchment process as required under the law. Naturally, if the establishment was employing at least 50 persons, they should have informed the appropriate government authorities of their intention to retrench employees. I think that was not done.

But the employees, at least you, did not ask when you should come to the office and what work you should do then. Nobody asked why the salary was not credited. Now, how can you say that you were in the company until December 2023? Did you mark your attendance? Did you receive a salary? No. Then what is the proof that you were working there?

It is true that the employer had not communicated your termination nor did they inform the government of their intention to terminate some employees. But you should have raised a dispute when you did not receive a salary in July or August 2020. Therefore, the matter is a question of law, and if you take it forward, I feel that you may put yourself in trouble. At the same time, as promised by the employer, if you had submitted a resignation antedated, they would have helped you find another job. You did not use that option in July 2020 but remained at home, presuming that you were still in service but on loss of pay. Now you have to establish that you remained on leave without pay as per the instructions of the company so that continuity of service could be proved. Do you have any communication from the company that you have to remain off the service for such a long time?

Hi,

This case looks a bit perplexing.

In the absence of proper communication from the employer, you may challenge the employer's decision by stating that you neither submitted a resignation nor were officially relieved by the employer. Therefore, the period of absence from April 2020 to December 2023 should be considered as continuity of employment. Moreover, as per your claim, your employer temporarily withheld employment, which was communicated through email, and assurance was given by the employer to call back employees in due course. You may request Gratuity from your employer. Submit FORM 'I' through RPAD and wait for their response.

That means there was a communication in January 2023, and the company offered a different role with a different salary, but you declined to accept the offer. Neither the company terminated you, nor did you resign. Both the company and you were wrong because the company, even though it did not terminate you, had given you options to rejoin. Rejoining always happens when you are not in service. You did not question the company, saying, "Why should I rejoin when I am still in service but remaining off without salary?"

I understand that there should have been further communication from you stating that you need a higher salary because the role is different, or you should have said that you cannot work for a salary from three years ago. The company should have stated that they cannot offer more than the amount offered. All these establish that you were aware that you were not on their payroll at that time. The company also knew that you were not in service but being unemployed; they offered you a new role which they have now, right? Then what is the meaning in asking the company about your gratuity?

Miscommunication and Employment Status

That means they have treated you as having left the service. True, there was miscommunication between both of you. What about other employees? There should be someone else also in the 'pause' category, right?

PF Status Inquiry

Similarly, what is the status with the PF? Did they exit you from PF in 2020?

The management has not acted properly. However, you cannot disown your responsibilities as well. If the employer has exited you from the PF, you should have acted at least then. You cannot argue that you were unaware of the exit. You are not an unskilled workman who may not have access to the member portal regularly and know the status.

Now, I don't think it is time to question and demand gratuity. As already mentioned, it is a question of law, and there is a possibility, as our learned member Lakshmi Narayanan said, you can still apply for gratuity in Form I and wait for their response. But will it make the management hostile? Think over it. Also, the amount of gratuity that you may get would be restricted to the basic pay of your last drawn salary, i.e., the salary of 2020. If the performance-linked variable pay, compensative allowances like house rent, fuel reimbursements, or conveyance allowance, etc., are removed from the salary, the amount that will qualify for gratuity would be very less. Should we proceed?

Alternatively, if the management is ready to give you a service certificate which would state that you have worked till date or your relieving date is the current date, that would at least secure your career. Obviously, there will not be any negative remarks from the employer when a background verification is initiated by your future employer. Please think and then act.

All the best.