Gratuity payment during sick leave

34 years is the completed period of service. It is correct. Gratuity is a collectable amount for an employee, paid as a gratitude by the organization. It is also known as the end of service benefits. An individual who has worked in an organization for a minimum period of 5 years is eligible for this benefit. Gratuity is calculated based on his/her average salary, dearness allowance and number of years he/she worked in the organization.

It is with limited understanding that:

The establsihment might have passed order to treat LOP as break in service.

You may go thru; Sec:2A of Payment of Gartuity Act,1972.

The approach of the company seems to be:

'That days of absence from work without pay are not included in computing the period of service. If one remained absent from work without pay, then, that duration will not be counted.'  

The company must have supplied 'Notice of Determiantion of Gratuity' and order on sanction of leave.

As per Section 2 A, if the employer has not issued order treating the LOP as break in service, then the employee is entitled to 36 years instead of 34 years.  Find out whether employer issued break in service order or not.

Check: If LOP is part of service rules, service conditions, leave policy, standing orders etrc etc and was duly approved (without any break in service)