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Amit K (Executive)     10 March 2011

Gratuity Calulation after Long Leave

Hi all:


I was employed in a small pvt organisation belonging to a relative between April 1993 to  - June 1995 (2 yrs and 3 months) and then again between Nov 1998- March 2004 (5 years & 5 months). The 1st  break was due to study leave and 2nd time, i joined another company. Both times, i didn’t officially resign from the company but just verbally informed them.


After a gap of 6 years, I rejoined them the 3rd time between Nov 2009 - March 2010. (5 months). I stopped working with them after this due to the ill financial health of the company. This time again i just informed them verbally.


Now in order to claim my EPF and Gratuity they are asking me to submit an official resignation letter. Let me know if i am i eligible for Gratuity and if so, what is the "no of years in service" should i use to calculate my service eligibility is it from 1993 onwards  i.e. 17 years or lesser?




 8 Replies

Tushar Chowdhary (Lawyer/Consultant)     11 March 2011

You will only be eligible to claim Gratuity for Nov-98 to Mar-2004 i.e for (5 years and 5 months).

1 Like

Pankaj S. Rana (Assistant Labour Commissioner)     11 March 2011

Dear Amit,

As per the provisions of the Payment of Gratuity Act, 1972 and according to the your circumstances-

1- In the first and third phase of your job you have not completed the minimum time for gratuity. The minimum time for elegibilty is 5 years of continous service.

2- Only in the second phase you are completing 5 years of service. You can entitled to get gratutity only for this second time frame i.e. for the purpose of calculating gratuity, your length of service will be only 5 years.

3- According to Section 4 of the Act Gratuity  shall be  payable  to  an employee on  the termination  of his  employment after he has rendered continuous service for not less than five years,-- 

           (a) on his superannuation, or 

           (b) on his retirement or resignation, or 

           (c) on his death or disablement due to accident or disease:

4- Your employer is very correct if he is asking for your written regisnation for payment of gratuity.

Pankaj Singh Rana,

Assistant Labour Commissioner, UP     
1 Like

Amit K (Executive)     04 April 2011

Dear Mr. Chowdhary / Mr. Rana:

Thanks for your replies. Further, can you let me know -

As per above scenario, for the purpose of Gratuity Calculation, 

1) The Basic Salary in the Gratuity formula is Monthly or Annual?

2) What shall be my "no of years in service"  - 5.5 years or 17 years?

3) What shall be the last salary drawn  - Rs 15000/- as per last salary of March 2004 or Rs 25000/- as per last salary of March 2010?


Amit K


pls note;

-any oral communication donot have legal value until it is recorded

-if you relative says u have left without informing them, then no meaning in saying it is rejoined or continuous service

-but any employer will ask resignation letter as a proof of end of your emplyment nor absonding without informing

Kumar Doab (FIN)     27 April 2018

You can benefit from above advices…

Still to clear doubts that may hamper your own interest..

The study leave, dual/double/parallel employment are all matters of policy for employer…

The employer is at liberty to sanction/approve/regularize the leave and break in service…and even agree to accept double employment…by IT’s sweet will or as per applicable service/leave/conduct and discipline rules..provided you attended office of establishment during period you wish to claim benefits…However the chances are remote..!

The employer is at liberty to offer better terms of Gratuity…

Even payment of Gratuity for less than 5Y..

Kumar Doab (FIN)     27 April 2018

Assuming that Payment of Gratuity Act is applicable to such establishment in which you are working

GO thru:

Payment of Gratuity Act, 1972;1,2A, 4(5)

and check if your establishment is covered and if covered you are eligible..for at least one tenure as already posted above.

{(5) Nothing in this section shall affect the right of an employee to receive better terms of gratuity under any award or agreement or contract with the employer.}


You may also go thru simple to understand:



and simple to understand  Rules by your state e.g;

The Payment of Gratuity (Maharashtra) Rules, 1972


Formulae for calculation;

Gratuity={ ( Basic+DA)/26*15* NO of years in service}

Basic+DA as per last drawn wages..

Kumar Doab (FIN)     27 April 2018


Perspectives; Employer can pay Gratuity on LWD with FnF.. 

After relieving employee can submit letter under proper acknowledgment stating that ‘Notice of Determination of Gratuity’, payment, requisite forms are not supplied and may be supplied… If employer does not pay within 30days from LWD IT has to tender interest @10%pa… 

In your case IT is entirely between you and employer to resolve the matter…

Try to get service certificate for each term and/or 1st+2nd +3rd=total term……….

As suitable to you and employer…

Likewise you can resolve for PF if PF was applicable to establishment and you..

Get acceptance of resignation..

Kumar Doab (FIN)     27 April 2018


For all issues that are bothering you and posted in threads preferably to get proper legal opinion from a very able LOCAL senior counsel of unshakable repute and integrity specializing in testamentary/succession/ civil/Labor-servcie matters and well versed with LOCAL applicable rules/laws and having successful track record…. and worth his/her salt..


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