Pvt sector employees will now get higher amount as Gratuity

Speed Post News Network

New Delhi : The Payment of Gratuity (Amendment) Bill, 2018, which was passed by Lok Sabha on March 15, 2018, and by Rajya Sabha on March 22, 2018, was brought into force on March 29, 2018, following assent from the President of India and notified by the Government.

The Payment of Gratuity Act, 1972, applies to establishments employing 10 or more persons.  The main purpose for enacting this Act is to provide social security to workman after retirement, whether retirement is a result of superannuation, or physical disablement or impairment of vital part of the body.  Therefore, the Payment of Gratuity Act, 1972, is an important social security legislation to wage earning population in industries, factories and establishments.

The present upper ceiling on gratuity amount under the Act is Rs 10 Lakh. The provisions for Central Government employees under Central Civil Services (Pension) Rules, 1972, with regard to gratuity are also similar.  Before implementation of 7th Central Pay Commission, the ceiling under CCS (Pension) Rules, 1972, was Rs 10 Lakh.  However, with implementation of 7th Central Pay Commission, in case of Government servants, the ceiling was raised to Rs 20 Lakh.

Therefore, considering the inflation and wage increase even in case of employees engaged in private sector, the Government decided that the entitlement of gratuity should also be revised in respect of employees covered under the Payment of Gratuity Act, 1972.  Accordingly, the Government initiated the process for amendment to Payment of Gratuity Act, 1972, to increase the maximum limit of gratuity to such amount as may be notified by the Central Government from time to time. Now, the Government has issued the notification specifying the maximum limit to Rs 20 Lakh, according to a PIB release.

In addition, the Bill also envisages to amend the provisions relating to calculation of continuous service for the purpose of gratuity in case of female employees who are on maternity leave from ‘twelve weeks’ to ‘such period as may be notified by the Central Government from time to time’.  This period has also been notified as twenty six weeks.

This will ensure harmony amongst employees in the private sector and in Public Sector Undertakings/ Autonomous Organizations under Government not covered under CCS (Pension) Rules. These employees will be entitled to receive higher amount of gratuity at par with their counterparts in Government sector.