Lok Sabha passes bill to increase employees' gratuity limit

The Lok Sabha on Thursday passed a bill that seeks to increase the maximum limit of gratuity of employees in the private and public sector from the present Rs 10 lakh to Rs 20 lakh.

Labour Minister Santosh Kumar Gangwar moved The Payment of Gratuity (Amendment) Bill, 2017, which was passed by voice vote amid din in the house over various issues raised by the opposition as also some other parties.

The bill seeks to increase the maximum limit of gratuity of employees in the private sector and in public sector undertakings and autonomous organisations under the government, who are not covered under Central Civil Service (Pension) Rules, at par with the central government employees.

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 an establishment employing ten or more persons.

The present upper ceiling on gratuity amount under the Act is Rs 10 lakh.

The provisions for Central Government employees under CCS (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 but it was doubled to Rs 20 lakhs from January 1, 2016.

The bill's statement of objects and reasons states that the government is of the view that the gratuity should also be revised for employees who are covered under the existing act considering inflation and wage increase.

The bill empowers the Central Government to notify the proposed ceiling so that the limit can be revised from time to time keeping in view the increase in wage and inflation, and future Pay Commissions without having to amend the Act, by substituting the words "ten lakh rupees" in Section 4 with the words "such amount as may be notified by the Central Government from time to time".

It also seeks to amend Section 2A of the Act so as to empower the 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.

This has been necessitated as maximum maternity leave, for the purpose of calculating continuous service under the Act, was based on the maternity leave provided under the Maternity Benefit Act, 1961, but extended from 12 weeks to 26 weeks by the Maternity Benefit (Amendment) Act, 2017.

The amendments proposed by Revolutionary Socialist Party member N.K. Premachandran and Congress' Adhir Ranjan Chowdhury were negated by voice vote.

--IANS

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