Union Cabinet approves introduction of Payment of Gratuity (Amendment) Bill, 2017 in Parliament

The Union Cabinet chaired by the Prime Minister Narendra Modi on 12 September 2017 approved the introduction of the Payment of Gratuity (Amendment) Bill, 2017 in the Parliament. The Bill amends Payment of Gratuity Act, 1972.

The Amendment Bill calls for increasing the maximum limit of gratuity of employees in the private sector and in Public Sector Undertakings or Autonomous Organizations under Government which are not covered under CCS (Pension) Rules, at par with Central Government employees.

Payment of Gratuity Act, 1972
• The Payment of Gratuity Act, 1972 applies to establishments employing 10 or more persons.
• The main purpose of this Act is to provide social security to workmen after retirement, whether retirement is a result of the rules of superannuation, or physical disablement..
• It 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 of gratuity for Central Government employees under Central Civil Services (Pension) Rules, 1972 are similar as that of private sector employees or PSUs.

However, with the implementation of 7th Central Pay Commission, the ceiling of gratuity has been revised to Rs 20 Lakhs in case of Government servants.

Considering this and keeping in mind the inflation and wage increase, Union Government is of the view that gratuity should be revised for employees who are covered under the Payment of Gratuity Act, 1972.

Accordingly, the Government initiated the process for amending Payment of Gratuity Act, 1972.