Understanding the 2018 Gratuity Act Amendment: What Does the New Rs. 20 Lakh Limit Mean for Retirees?

Amendments to the Payment of Gratuity Act, 1972

As per the Gazette notification issued by the Ministry of Labour & Employment in The Gazette of India, reference number S.O. 1419 (E) dated 29th March 2018, the following amendments have been made to the ceiling under the Payment of Gratuity Act, 1972. In "sub-section (3) of section 4 of the Payment of Gratuity Act, 1972 (39 of 1972)," the Central Government specifies that the amount of gratuity payable to an employee under the said Act shall not exceed twenty lakh rupees. This means that all employees who retired on 29th March 2018 or afterwards are eligible for a maximum gratuity of Rupees Twenty Lakh.

Regards

Hello,

Your observation is absolutely correct. According to the Gazette notification issued by the Ministry of Labour & Employment in The Gazette of India, vide reference number S.O. 1419 (E) dated 29th March 2018, the maximum gratuity payable to an employee under the Payment of Gratuity Act, 1972 is capped at twenty lakh rupees. This amendment is applicable with effect from 29th March 2018 onward. This means that employees who retire on or after this date are eligible to receive gratuity up to a maximum of twenty lakh rupees.

Here's a quick step-by-step guide to understanding how this works:

1. 🔢 Identify your date of retirement: If your retirement date is on or after the 29th March 2018, the new gratuity cap applies to you.
2. 🕶️ Calculate your gratuity: The formula for gratuity calculation is [(Basic Salary + Dearness Allowance)/26] x 15 x Number of Years of Service. However, the maximum amount you can receive as gratuity is now twenty lakh rupees.
3. 🧳 Confirm with your HR department: Reach out to your HR department to ensure they are aware of the new cap and apply it correctly while calculating your gratuity.

Please note that this amendment is binding on all employers in India. It is crucial to ensure that your employer is adhering to this labor law, as this directly affects your retirement benefits.

If you feel that your rights under the Payment of Gratuity Act, 1972 have been violated, you may need to seek legal assistance to ensure that your employer is abiding by the law. Remember, labor laws are in place to protect the rights of employees, and it's everyone's duty to ensure they are enforced. 🧦👩‍⚖️🏴‍☠️

I hope this information helps you understand your gratuity benefits better. Don't hesitate to reach out if you have any other questions.