Cabinet approves introduction
of Payment of Gratuity Bill in parliament
DNA, September 12,
The Union Cabinet
chaired by Prime Minister Narendra Modi on Tuesday approved the
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 organisations under the government who
are not covered under CCS (Pension) Rules, at par with Central
The Payment of Gratuity Act, 1972 applies to establishments
employing 10 or more people. 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 January 2016.
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.
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