CENTRE PLANNING TO DOUBLE THE GRATUITY - PROPOSAL APPROVED BY CABINET

Under the chairmanship of Prime Minister Shri Narendra Modi, the Union Cabinet has given its approval to present the Payment of Gratuity (Amendment) Bill, 2017 in Parliament.

This amendment will increase the maximum ceiling of the Gratuity to be paid to the employees of the private sector and the employees of public sector / autonomous organizations under the Central Government, which are not covered under the CCS (Pension) Rules, as per the Central Government employees.

Background:

Payment of Gratuity Act, 1972 is applicable on establishments employing ten or more people. The main objective of this Act is to implement - Social retirement of workers after retirement, whether retired as a result of retirement rule or failure of vital body part resulting the physical disability. So Payment of Gratuity Act 1972 plays an important in social protection of the population earning wages in factories and shops and commercial establishment.

Under the Act, the maximum ceiling on the gratuity amount is 10 lakh rupees. There is a similar provision for central employees under the CCS (Pension) Rules, 1972 in relation to the issue. Before the seventh Central Pay Commission was implemented, the maximum limit under CCS (Pension) Rules, 1972 was 10 lakh rupees. However, with the implementation of the seventh Central Pay Commission, in the case of government employees, the maximum limit is now Rs 20 lakh from January 1, 2016.

Therefore, considering the inflation and salary increase in the case of employees working in the private sector, the Government, now has a view that the eligibility for employees included under the Payment of Gratuity Act, 1972 should be amended. Accordingly, the Government has initiated the amendment process in the Payment of Gratuity Act, 1972.

For further details in this regard, please write to us at:

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