A female employee takes 30 weeks of maternity leave in her 5th year of service. Will this entire leave be counted towards continuous service for gratuity eligibility?

As per the Payment of Gratuity Act, 1972, only 26 weeks of maternity leave are recognized as part of continuous service for the purpose of gratuity eligibility.

The Central Government, through its notification S.O. 1421(E) dated 29th March 2018, has fixed 26 weeks as the maximum period of maternity leave that can be counted towards continuous service.

Any leave beyond 26 weeks (e.g., an additional 4 weeks) will not be counted, unless the company has a specific policy to recognize such extended leave.
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If the employee has earned leave and avails it after the 26 weeks of maternity leave, that period will be counted as part of continuous service. However, if the extended leave is unpaid (and not earned or officially sanctioned), it will not be considered for gratuity calculation.

This becomes particularly critical in the fifth year of service, where gratuity eligibility depends on completing at least 240 days of active or recognized service in that year. If the excess leave causes the total days of recognized service to fall below this threshold, the employee may not qualify for gratuity.

Recommendation:
It is important for employers to clearly communicate this provision to all eligible female employees through internal policies. ​

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Shekar Ganagaluru's Books

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K. VITTALA RAO's HR Books