Gratuity Payment Situations
Situation No. 1: If an employee completed five years of service in a company but was on leave for one year and now, after one year, has resigned, is the company liable to pay gratuity for 5 years or for 6 years?
Situation No. 2: If an employee completed five years of service in a company but was on leave for 4 months in the 6th year of service and after 4 months rejoined, is the company liable to pay gratuity for the 4 months of leave or not?
And sorry—please don't judge me if I'm wrong in any situation.
From India, Gurgaon
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Situation No. 1: If an employee completed five years of service in a company but was on leave for one year and now, after one year, has resigned, is the company liable to pay gratuity for 5 years or for 6 years?
Situation No. 2: If an employee completed five years of service in a company but was on leave for 4 months in the 6th year of service and after 4 months rejoined, is the company liable to pay gratuity for the 4 months of leave or not?
And sorry—please don't judge me if I'm wrong in any situation.
From India, Gurgaon
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Gratuity Payment in Case of Unpaid Leave or Unauthorized Absence
If the leave for one year was "unpaid leave" or "unauthorized absence," or if an order treating it as a "break-in-service" was passed by the employer, then the employee will not be entitled to be paid gratuity for that year.
Continuous Service and Gratuity Eligibility
If the employee works for 240 days in any period of 12 months, the same is treated as 'continuous service.' Hence, even if the employee was on leave for 4 months, the period of 8 months will qualify them for gratuity for that year.
Regards, S. K. Mittal
[Phone Number Removed For Privacy-Reasons]
From India, Faridabad
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56If the leave for one year was "unpaid leave" or "unauthorized absence," or if an order treating it as a "break-in-service" was passed by the employer, then the employee will not be entitled to be paid gratuity for that year.
Continuous Service and Gratuity Eligibility
If the employee works for 240 days in any period of 12 months, the same is treated as 'continuous service.' Hence, even if the employee was on leave for 4 months, the period of 8 months will qualify them for gratuity for that year.
Regards, S. K. Mittal
[Phone Number Removed For Privacy-Reasons]
From India, Faridabad
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I hope you agree with the presumption that the very description of your post indicates that "the leave" mentioned in both situations is authorized leave on loss of pay only and not unauthorized absence from duty involving disciplinary action under the service rules.
Eligibility and Entitlement for Gratuity
The gratuity contemplated under the Payment of Gratuity Act, 1972 hinges on two conditions, namely "Eligibility for gratuity" and "Entitlement to gratuity." Every employee staking their claim for gratuity under the Act upon the termination of their employment, other than by reason of death or disablement due to accident or disease, should fulfill these two conditions.
Eligibility for Gratuity
Eligibility for gratuity is attained by an employee by rendering not less than 5 years of continuous service in the same establishment on the date of termination of his/her employment.
Entitlement to Gratuity
Entitlement to gratuity for every year of continuous service is acquired by the employee by completing 240 days of service in a period of 12 calendar months as specified in sec. 2-A of the Act. Section 2-A introduces a legal fiction by recognizing certain interruptions in service as non-interruptions for the purpose of computing continuous service in a given block of 12 months or 6 months as the case may be.
Types of Interruptions
If we critically analyze the definition under section 2-A, the interruptions deemed as non-interruptions for the purpose of the section are of two types: interruptions attributable to the employee, such as leave and absence from duty, which are not treated as breaks in service as per the rules of the establishment; and all other interruptions like accidents, sickness, layoff, strike, lockout, and other kinds of involuntary cessation of work are interruptions not attributable to the employee.
Therefore, when an employee remains on leave without wages for the entire year, they automatically lose their entitlement to gratuity for that particular year, though that year is taken into account for computing their eligibility for a minimum qualifying service of not less than 5 years.
On the other hand, if they remain on leave without wages for only 4 months in a period of 12 months, they are entitled to gratuity for the entire year as they would be completing 240 days of service in the remaining period.
From India, Salem
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Eligibility and Entitlement for Gratuity
The gratuity contemplated under the Payment of Gratuity Act, 1972 hinges on two conditions, namely "Eligibility for gratuity" and "Entitlement to gratuity." Every employee staking their claim for gratuity under the Act upon the termination of their employment, other than by reason of death or disablement due to accident or disease, should fulfill these two conditions.
Eligibility for Gratuity
Eligibility for gratuity is attained by an employee by rendering not less than 5 years of continuous service in the same establishment on the date of termination of his/her employment.
Entitlement to Gratuity
Entitlement to gratuity for every year of continuous service is acquired by the employee by completing 240 days of service in a period of 12 calendar months as specified in sec. 2-A of the Act. Section 2-A introduces a legal fiction by recognizing certain interruptions in service as non-interruptions for the purpose of computing continuous service in a given block of 12 months or 6 months as the case may be.
Types of Interruptions
If we critically analyze the definition under section 2-A, the interruptions deemed as non-interruptions for the purpose of the section are of two types: interruptions attributable to the employee, such as leave and absence from duty, which are not treated as breaks in service as per the rules of the establishment; and all other interruptions like accidents, sickness, layoff, strike, lockout, and other kinds of involuntary cessation of work are interruptions not attributable to the employee.
Therefore, when an employee remains on leave without wages for the entire year, they automatically lose their entitlement to gratuity for that particular year, though that year is taken into account for computing their eligibility for a minimum qualifying service of not less than 5 years.
On the other hand, if they remain on leave without wages for only 4 months in a period of 12 months, they are entitled to gratuity for the entire year as they would be completing 240 days of service in the remaining period.
From India, Salem
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Payment of Gratuity Act, 1972 & The Rules.ppt
THE PAYMENT OF GRATUITY ACT 1972.doc