How Gratuity will be calculated if there's a break in the service?

Let’s say after completing 9 yrs 5 months in an organisation, one employee was suspended for some charges for 3 days with LWP, after that he is still continuing in the same organisation. So will it affect his gratuity in any way? Will gratuity be calculated in two parts or in continuity and will it be counted as a break in the service?

Solution:

This LWP of 3 days will not affect calculations of 240 days in the year. 9 years 5 months as such will be treated as 9 years.

Again, the suspension is of two types viz., suspension pending enquiry and punitive suspension.
In the case of suspension pending enquiry, after any punishment finally awarded in the disciplinary proceedings, the period of suspension would be regularised as duty or a portion of suspension undergone already can be ordered as punishment subject to the restriction on its length as mentioned in the service regulations/standing orders as the case be.
Only the punitive suspension would be treated as break in service as a disqualification for the purpose of calculation of continuous service for gratuity.
It’s to be noted again that only this unqualified period of service alone will not be taken into account for calculation of total service comprising of the period before and after the period of such punitive suspension which is a kind of what is called as " dies non " in service terms. A dies non will not be an effective break in service so as to affect the continuity of employment just before and after such break but will not be taken into account only for terminal benefits like gratuity, pension etc.

Therefore, in case of termination of your employment in future, only these three months would be excluded from your then entire service for the purpose of calculation of gratuity under the PGA, 1972.

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There is a new order being proposed for Gratuity… Wait to hear more.

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If the Employee is on LOP for 3 to 4 months. Will that 3 or 4 months will be counted for Gratuity eligibility calculation. Or need to exclude the period for calculation.
LOP is HR approved leave without pay.

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Hi,

As per your explanation above I didn’t see the employment break , it just employee was on long leave.

Yes you have to include this period also while calculating his Gratuity.

Hope this information helps you.

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Ideally, We should consider the breaks aspects only when Employee is just completing or about to complete 5 Years continuous service clause.

If Employee has already passed this criteria of 5 Years of Continuous Service, then anyways Act says 6 months = 1 year.

As per the Section 2A of the Act, it is clear that in the event the employee is absent from the duty due to sickness, accident, leave or absence from duty without leave, he/she would be entitled to the benefit of gratuity unless the employer has passed an order treating such absence without leave as a break in service in accordance with the Standing Orders of Employment applicable to the employee. In the case of a sabbatical leave, the same would essentially qualify as a leave if permitted by the employer and would only be a leave for a longer duration than a usual leave and therefore, shall be treated as a continuous service in terms of Section 2A of the Act. In other words, if an employee goes on a sabbatical with the consent of the employer and resumes work after completion of the period of sabbatical, he or she would be deemed to be in continuous service for the purpose of payment of gratuity.

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Yes, It clarifies my query.

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