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Prasanna Simha (Advocate)     16 August 2012

Continuity of service for gratuity

Hi Everybody,

Please let me know if an employee has served more than 4 years with some months as Loss of Pay / Leave without Pay, whether his LOP period needs to be included or excluded in the "Continuous Service" or not.

For Ex: If X has worked for an organization for 4 years 09 months with 03 months LOP. Whether he is eligible for gratuity or not. This example is given just to get clarifications in case of rounding off the service period.

Please help me in getting clarification on this....

Thanks & Regards

Prasanna Simha



Learning

 4 Replies

Rama chary Rachakonda (Secunderabad/Telangana state Highcourt practice watsapp no.9989324294 )     16 August 2012

The primary condition to receive gratuity is that an employee should be in service continuously for five (5) years. This condition is relaxed in the case of termination due to death or disablement. In these cases, no minimum period of service is required. 

Kumar Doab (FIN)     16 August 2012

Payment of Gratuity Act, 1972

Section: 2A
Continuous service.

For the purposes of this Act, -

(1) an employee shall be said to be in continuous service for a period if he has, for that period, been in uninterrupted service, including service which may be interrupted on account of sickness, accident, leave, absence from duty without leave (not being absence in respect of which an order [***] treating the absence as break in service has been passed in accordance with the standing order, rules or regulations governing the employees of the establishment), lay off, strike or a lock-out or cessation of work not due to any fault of the employee, whether such uninterrupted or interrupted service was rendered before or after the commencement of this Act.

Prasanna Simha (Advocate)     17 August 2012

Thanks Mr. Kumar. So this means even if an employee is on LOP / LWP but on rolls of the company is eligible to claim the Gratuity and can take count of LOP / LWP period as continuity in service. Please confirm.

Kumar Doab (FIN)     17 August 2012

It is felt that approved leave shall be counted, and the leave you have cited has not been updated as a break in service by an order of the establishment.

Section: 2A
Continuous service.

For the purposes of this Act, -

(1)

"absence from duty without leave (not being absence in respect of which an order [***] treating the absence as break in service has been passed in accordance with the standing order, rules or regulations governing the employees of the establishment),"

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