Parliament
passes the much awaited Payment of Gratuity (Amendment) Bill, 2018 few days
back. On Thursday, the Upper House of
Parliament i.e., Rajya Sabha passed
The Payment of Gratuity Bill 2017 which was introduced by Minister of Labour and Employment on December 18, 2017. It will
become law after the signature of our respectable president.
BACKGROUND:
The Payment of Gratuity
Act, 1972 was enacted to provide for a scheme for the payment of gratuity to
employees engaged in factories, mines, oilfields, plantations, ports, railway
companies, shops or other establishments who have rendered a minimum five years
of continuous service with the establishment employing ten or more persons.
The calculation of
gratuity amount is based on a formula, which is fifteen days of wages for each year
of completed service, subject to a ceiling. The present ceiling, as provided
under section 4 of the Act is rupees 10 Lakhs which was fixed in the year 2010.
The period of 12 weeks of maximum maternity leave
presently provided in section 2A of the Act for the purpose of calculating
continuous service under the Act is on the basis of period of maximum maternity
leave as provided in the Maternity Benefit Act, 1961.
The maximum maternity
leave under the Maternity Benefit Act, 1961 has been enhanced from twelve weeks
to twenty-six weeks by the Maternity Benefit (Amendment) Act, 2017. It is
therefore proposed to empower the Central Government to enhance the period of
existing twelve weeks to such period as may be notified by it.
The provisions contained
in the Central Civil Services (Pension) Rules, 1972 for Central Government
employees with regard to gratuity are similar to the provisions contained in
the Act. After implementation of the 7th Central Pay Commission, the ceiling of
gratuity for Central Government employees has been enhanced from rupees 10 Lakhs to rupees 20 Lakhs. In the past, the ceiling amount of gratuity under the Act
has followed the Central Pay Commission recommendations.
Therefore, considering
the inflation and wage increase even in case of employees engaged in private
and public sector, the entitlement of gratuity is also required to be revised
for employees who are covered under the Act. It has also been proposed to
empower the Central Government to notify the ceiling proposed, instead of
amending the said Act, so that the limit can be revised from time to time
keeping in view the increase in wage and inflation, and future Pay Commissions.
The Payment of Gratuity (Amendment) Bill,
2017, inter alia, proposes to
amend—
(a)
section 2A of the Act so as to empower the Central Government to notify the period
of maternity leave in case of female employee as deemed to be in continuous service
in place of existing twelve weeks;
(b)
section 4 of the Act to substitute the words "ten lakh rupees" with
the words "such amount as may be notified by the Central Government from
time to time".
FOLLOWING ARE THE AMENDMENTS PASSED THROUGH THIS BILL
The bill was passed to bring
private sector employees at par with their public sector counterparts as far as
gratuity ceiling is concerned. In short following amendments were passed by the
Govt.
The Payment of Gratuity (Amendment)
Bill will increase the ceiling of tax-free gratuity amount from Rs 10 lakh to Rs 20 lakh. Further, this
will allow the government to increase the gratuity ceiling from time to time without
amending the law. After the implementation of the 7th Central Pay Commission,
the ceiling gratuity for Central Government employees has been enhanced from
Rs. 10 lakh to Rs. 20 lakh. Seeking to amend the current provision (Section 4)
of the Payment of Gratuity Act, 1972, the bill empowers the government to
notify the ceiling proposed instead of amending the Act. This amendment was
sought so that the limit can be revised from time to time with the increase in
wage and inflation and future pay commissions.
Further, another change which is introduced
is that the period of maternity leave prescribed as 12 weeks in Section 2A has been amended as 26 weeks to keep the Act in tune with the recently amended
Maternity Benefit Act.
CONCLUSION:
It must be considered as a good
step for female as well as male employees working in private organisations. Now
the government need not to introduce a separate bill for any aforesaid
amendments. Women will get more leaves. Hope the above amendments are understandable
and will help all of you.
SOURCE:
PIB
Prsindia
Economictimes
Livelaw
Indianexpress
Ndtv
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