Payment of Gratuity (Amendment) Bill, 2018 passed by Parliament
The Payment of Gratuity (Amendment) Bill, 2018 has been passed by Parliament today. The bill ensures harmony among employees in the private sector and Public Sector Undertakings/Autonomous Organizations under the Government who are not covered under CCS (Pension) Rules. These employees will be entitled to receive a higher amount of gratuity on par with their counterparts in the Government sector. The bill was passed by the Rajya Sabha today and by the Lok Sabha on 15th March 2018.
The Payment of Gratuity Act, 1972
The Payment of Gratuity Act, 1972 applies to establishments employing 10 or more persons. The main purpose of enacting this Act is to provide social security to workers after retirement, whether retirement is a result of superannuation, physical disablement, or impairment of a vital part of the body. Therefore, the Payment of Gratuity Act, 1972 is an important social security legislation for the wage-earning population in industries, factories, and establishments.
Ceiling on Gratuity Amount
The present upper ceiling on the gratuity amount under the Act is Rs. 10 lakh. The provisions for Central Government employees under Central Civil Services (Pension) Rules, 1972, regarding gratuity are also similar. Before the implementation of the 7th Central Pay Commission, the ceiling under CCS (Pension) Rules, 1972, was Rs. 10 lakh. However, with the implementation of the 7th Central Pay Commission, in the case of Government servants, the ceiling has been raised to Rs. 20 lakhs.
Revisions for Private Sector Employees
Therefore, considering inflation and wage increases even in the case of employees engaged in the private sector, this Government has decided that the entitlement of gratuity should also be revised for employees covered under the Payment of Gratuity Act, 1972. Accordingly, the Government initiated the process to amend the Payment of Gratuity Act, 1972 to increase the maximum limit of gratuity to such an amount as may be notified by the Central Government from time to time.
Amendments for Female Employees
In addition, the Bill also envisages amending the provisions relating to the calculation of continuous service for the purpose of gratuity in the case of female employees who are on maternity leave from 'twelve weeks' to such a period as may be notified by the Central Government from time to time.
Delegation of Power to Revise Gratuity Ceiling
After the enactment of the Act, the power to notify the ceiling of the amount of gratuity under the Payment of Gratuity Act, 1972 shall be delegated to the Central Government so that the limit can be revised from time to time, considering the increase in wages, inflation, and future pay commissions.
The Payment of Gratuity (Amendment) Bill, 2018 has been passed by Parliament today. The bill ensures harmony among employees in the private sector and Public Sector Undertakings/Autonomous Organizations under the Government who are not covered under CCS (Pension) Rules. These employees will be entitled to receive a higher amount of gratuity on par with their counterparts in the Government sector. The bill was passed by the Rajya Sabha today and by the Lok Sabha on 15th March 2018.
The Payment of Gratuity Act, 1972
The Payment of Gratuity Act, 1972 applies to establishments employing 10 or more persons. The main purpose of enacting this Act is to provide social security to workers after retirement, whether retirement is a result of superannuation, physical disablement, or impairment of a vital part of the body. Therefore, the Payment of Gratuity Act, 1972 is an important social security legislation for the wage-earning population in industries, factories, and establishments.
Ceiling on Gratuity Amount
The present upper ceiling on the gratuity amount under the Act is Rs. 10 lakh. The provisions for Central Government employees under Central Civil Services (Pension) Rules, 1972, regarding gratuity are also similar. Before the implementation of the 7th Central Pay Commission, the ceiling under CCS (Pension) Rules, 1972, was Rs. 10 lakh. However, with the implementation of the 7th Central Pay Commission, in the case of Government servants, the ceiling has been raised to Rs. 20 lakhs.
Revisions for Private Sector Employees
Therefore, considering inflation and wage increases even in the case of employees engaged in the private sector, this Government has decided that the entitlement of gratuity should also be revised for employees covered under the Payment of Gratuity Act, 1972. Accordingly, the Government initiated the process to amend the Payment of Gratuity Act, 1972 to increase the maximum limit of gratuity to such an amount as may be notified by the Central Government from time to time.
Amendments for Female Employees
In addition, the Bill also envisages amending the provisions relating to the calculation of continuous service for the purpose of gratuity in the case of female employees who are on maternity leave from 'twelve weeks' to such a period as may be notified by the Central Government from time to time.
Delegation of Power to Revise Gratuity Ceiling
After the enactment of the Act, the power to notify the ceiling of the amount of gratuity under the Payment of Gratuity Act, 1972 shall be delegated to the Central Government so that the limit can be revised from time to time, considering the increase in wages, inflation, and future pay commissions.