Payment of Gratuity (Amendment) Bill, 2018 passed by Parliament

Published on 23 Mar 2018 by Shivi

Payment of Grauity

Image Credit: OutlookIndia

The Parliament has passed the Payment of Gratuity (Amendment) Bill, 2018. The Bill was passed by the Lok Sabha on March 15, 2018, and by Rajya Sabha on March 22, 2018. The bill aims to ensure consonance between employees in the private sector and Public Sector Undertakings/Autonomous Organizations under Government who are not covered under CCS (Pension) Rules.

The employees in the private sector will now be able to get a higher amount of gratuity similar to the employees in the Government sector. The Payment of Gratuity Act, 1972 is applicable to all the establishments that employee 10 or more people.

The Act aims to provide social security to employees post their retirement. The cause of retirement may be a result of superannuation or physical disablement or impairment of vital part of the body. The Act provides an upper ceiling on the amount of gratuity at Rs. 10 lakhs.

The upper ceiling under CCS (Pension) Rules, 1972 was increased to Rs. 20 lakhs after the implementation of 7th Central Pay Commission for Government employees. Thus, keeping in mind the wage increase and inflation, the Government decided that the entitlement of gratuity should also be revised in respect of employees who are covered under the Payment of Gratuity Act, 1972.

In addition, the Bill also envisages to amend the provisions relating to calculation of continuous service for the purpose of gratuity in case of female employees who are on maternity leave from 12 weeks to such period to be notified by the Central Government from time to time.


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