How Will the Gratuity Act Amendment Impact Your Future Benefits? Let's Discuss

The Cabinet on Thursday approved an amendment to the Gratuity Act to raise the ceiling from Rs 3.5 lakh to Rs 10 lakh. The Bill to amend the Act will now go to Parliament, a government official told FE.

Every salaried person, who has completed five years of government or private sector service, is eligible for half a month's salary as gratuity for every completed year of service. But the gratuity pay of those with higher salaries is now limited at Rs 3.5 lakh. The proposed amendment raises this to Rs 10 lakh. Every employer with more than ten salaried workers is mandated to provide gratuity to the eligible employees. Many companies, however, do not keep the gratuity liability adequately funded. That is, they make provisions for future payment, but do not set aside funds towards the future payment. Listed companies are expected to disclose their gratuity liability.

Meanwhile, the Cabinet Committee on Economic Affairs (CCEA) approved a proposal of India Infrastructure Development Fund Ltd (Mauritius) to raise contributions from international investors and invest in the India Infrastructure Development Fund. The proposal, earlier approved by the FIPB, will result in FDI exceeding Rs 750 crore.

The Cabinet approved the proposal of the shipping ministry to declare Andaman and Nicobar set of ports as a major port and establish the Andaman and Nicobar Port Trust with its headquarters at Port Blair.

Hi Abhiishere,

Can you send me the amendment bill, please? Is this approved by the Union Cabinet? If yes, from when will the bill be effective?

Thanks & Regards,
Lakshmi.

Can someone explain the impact on the employer because of the amendment? What is the current cost and what would be the impact because of the amendments.

Thanks,
Vijaya

I think after the bill is passed by the Parliament, it will go to the President, and only then will the notification be issued. The date of effectiveness of the act, if any, please let me know, or will the notification provide the same information.

Since the Payment of Gratuity Amendment Bill has been passed in Lok Sabha and Rajya Sabha on May 4th and 5th, 2010, when will the Gazette Notification be available on the website? Who can answer my query? I am eager to know the effective date of the revised Act.

Ashoke Kr Dhole

Gazette Notification No. and a copy of the Gratuity Amendment Act 2010 are urgently required as my date of retirement is approaching. Please confirm.

Ashoke Dhole

The Bill is for an amendment in the amount. The word Rs 3.5 Lacs is to be replaced with Rs 10.00 lacs in the Gratuity Act 1972. Other things remain unaltered.

With this Gazette notification, the government has penalized the employees who retired between 1-1-2006 and 23-5-2010, unlike all previous revisions to the ceiling of Gratuity. This is the first time such meanness has been shown by the Government of India.

Dear Colleagues,

Have a nice day!

Can you explain the Gratuity Policy? For instance, if an employee is terminated due to misconduct or continuous absence from duties but has completed one year or more of service with the company, can we include the gratuity in his full and final settlement?

Regards,
Aamir Sultan Shaikh
Contact No. 92-21-3333829127