Section 2A of the Payment of Gratuity Act, 1972: Continuous Service

Section 2A explained how "continuous service" was determined under the Payment of Gratuity Act, 1972, including uninterrupted service, deemed continuous service based on days actually worked, and the special rule for seasonal establishments.

Current legal position: The Code on Social Security, 2020 was brought into force on 21 November 2025. It repealed the Payment of Gratuity Act, 1972, subject to the saving provisions in Section 164 of the Code. Accordingly, Section 2A remains important for historical periods, saved rights, proceedings and questions governed by the repealed Act. For the current gratuity framework, refer to the Code on Social Security, 2020 and applicable rules/notifications.

Meaning of continuous service under Section 2A

Section 2A treated an employee as being in continuous service where service was uninterrupted. It also protected continuity where service was interrupted for specified reasons such as sickness, accident, leave, certain absence from duty, lay-off, strike, lock-out, or cessation of work not attributable to the employee.

Why the provision mattered: "Completed year of service" under Section 2(b) of the 1972 Act meant continuous service for one year. Section 2A therefore supplied the statutory test used to determine continuity for gratuity purposes under that Act.

Section 2A - statutory rule

Sub-section (1): Uninterrupted service. An employee was regarded as in continuous service for a period where the employee had been in uninterrupted service during that period. Specified interruptions - including sickness, accident, leave, qualifying absence, lay-off, strike, lock-out and cessation of work not due to the employee's fault - did not by themselves destroy continuity.

Sub-section (2): Deemed continuous service. Where a non-seasonal employee did not satisfy sub-section (1) for one year or six months, the Act prescribed minimum numbers of days actually worked during the relevant preceding calendar period.

Sub-section (3): Seasonal establishments. An employee in a seasonal establishment could be deemed to be in continuous service if the employee actually worked for not less than 75 per cent of the days on which the establishment operated during the relevant period.

Minimum days for deemed continuous service

Relevant period	Mine below ground or establishment working less than six days a week	Other cases
One year	190 days	240 days
Six months	95 days	120 days

The test looked to the prescribed number of days actually worked during the twelve or six calendar months preceding the date with reference to which the calculation was made. These thresholds were deeming rules; they did not replace the primary rule in sub-section (1) where uninterrupted or statutorily protected interrupted service was established.

Days treated as actually worked

For the purpose of the deemed-service test in sub-section (2), the Explanation included specified periods in the count of days actually worked. These included:

lay-off in the circumstances recognised by the applicable law or standing orders;
leave with full wages earned in the previous year;
absence caused by temporary disablement arising out of and in the course of employment; and
maternity leave for the period recognised under the applicable statutory provision/notification.

The later text of Section 2A referred to maternity leave for "such period as may be notified by the Central Government from time to time", rather than the older fixed twelve-week wording that appeared in earlier versions of the provision.

Effect of the Code on Social Security, 2020

The gratuity provisions are now contained in Chapter V of the Code on Social Security, 2020. The Ministry of Labour and Employment has stated that the Code was enforced from 21 November 2025. The Code consolidated the Payment of Gratuity Act, 1972 with other social-security enactments.

Section 164 of the Code deals with repeal and savings. It preserves specified actions, benefits, rules, notifications, orders and other matters under the repealed enactments to the extent provided by the saving clause. Therefore, the applicable law in a particular gratuity dispute may depend on the relevant service period, accrual of rights, proceedings and transitional provisions.

Practical understanding of Section 2A

Under the repealed 1972 Act, an employer could not determine continuity merely by counting physical attendance days where the employee otherwise fell within sub-section (1) or where the Explanation required particular non-working days to be counted. The 190/240-day and 95/120-day standards operated where the employee was not already in continuous service under sub-section (1).

For current gratuity claims arising after implementation of the labour codes, the operative provisions of the Code on Social Security, 2020, current rules, notifications and applicable transitional provisions should be checked rather than relying only on Section 2A of the repealed Act.

Official legal resources

Note: This page explains the legal provision for general information. For a specific gratuity claim, the relevant dates, employment record, establishment category, applicable government and transitional provisions should be examined.