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12 September 2017
 |
Payment of Gratuity (The Total Investment & Insurance
Solutions)
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 Total Investment
& Insurance Solutions
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.
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
Total Investment & Insurance Solutions
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. The Total
Investment & Insurance Solutions
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.The Total Investment &
Insurance Solutions
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