The Union Cabinet
chaired by the Prime Minister Shri Narendra Modi has given its approval for
introduction of the Payment of Gratuity (Amendment) Bill, 2017 in the
Parliament.
The Amendment will
increase the maximum limit of gratuity of employees, in the private sector and
in Public Sector Undertakings/ Autonomous Organizations under Government who
are not covered under CCS (Pension) Rules, at par with Central Government
employees.
Background:
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 workmen after
retirement, whether retirement is a result of the rules 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 now is Rs. 20 Lakhs effective from 1.1.2016.
Therefore, considering
the inflation and wage increase even in case of employees engaged in private
sector, the Government is of the view that the entitlement of gratuity should
be revised for employees who are covered under the Payment of Gratuity Act,
1972. Accordingly, the Government initiated the process for amendment to
Payment of Gratuity Act, 1972.
Press release can be
access at : http://pib.nic.in/newsite/erelease.aspx
dated 12th September, 2017.
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