Brief on Payment of Gratuity (Amendment) Act, 2018

Brief on Payment of Gratuity (Amendment) Act, 2018

” Representatives are requesting to this Ministry that the effective date of Payment of Gratuity (Amendment) Act, 2018 will 01.01.2016 instead of 29.03.2018 at par with the Central Government employees’

1. The Payment of Gratuity (Amendment) Bill, 2018 has been passed the 14th Sabba Sabha on 15.03.2018 and 22.03.2018 respectively and assented to by the Hon’ble President on 28th March, 2018.

2. The Government vide notification No.1420(E) dated 29th March, 2018 has enhanced the gratuity ceiling under the Payment of Gratuity Act, 1972 from Rs.10 lakh to Rs.20 Lakh with effect from 29th March, 2018.

3. A Large number of representations have been received in this Ministry from the Unions/Organizations/Individuals physically, through Social Media (Facebook/Twitter etc.) and PG Portal whereby the representatives are requesting to this Ministry that the effective date of Payment of Gratuity (Amendment) Act, 2018 will 01.01.2016 instead of 29.03.2018 at par with the Central Government employees’

4. In this regard, it is infirmed that on earlier occasions also, the enhancement in gratuity ceiling under the Payment of Gratuity Act, 1972 has been implemented with prospcetive date only. Further, implementation of the same with effect will be administratively difficult and employers may not have sufficient liquidity to meet the arrears liabilities.

Gazette Notification on Gratuity: Amount, Effective Date and Maternity Leave

Gazette Notification on Gratuity: Amount, Effective Date and Maternity Leave

“Gratuity Ceiling Amendment Notifications issued by Government of India regarding Upper limit of Gratuity Payment, Date on which come into force and Maximum Period of Maternity Leave…

MINISTRY OF LABOUR AND EMPLOYMENT

NOTIFICATION

New Delhi, the 29th March, 2018

S.O. 1419(E).—In exercise of the powers conferred by sub-section (2) of section 1 of the Payment of Gratuity (Amendment) Act, 2018 (12 of 2018), the Central Government hereby appoints the 29th day of March, 2018 as the date on which the said Act shall come into force.

[No.S-42012/02/2016-SS-II]
MANISH GUPTA, Jt. Secy.

NOTIFICATION

New Delhi, the 29th March, 2018

S.O. 1420 (E).—In exercise of the powers conferred by sub-section (3) of section 4 of the Payment of Gratuity Act, 1972 (39 of 1972), the Central Government hereby specifies that the amount of gratuity payable to an employee under the said Act shall not exceed twenty lakh rupees.

[No.S-42012/02/2016-SS-II]
MANISH GUPTA, Jt. Secy.

NOTIFICATION

New Delhi, the 29th March, 2018

S.O. 1421 (E).—In exercise of the powers conferred by clause (iv) of the Explanation to sub-section (2) of section 2A of the Payment of Gratuity Act, 1972 (39 of 1972), the Central Government hereby specifies for the purposes of the said clause that the total period of maternity leave in the case of a female employee shall not exceed twenty-six weeks.

[No.S-42012/02/2016-SS-II]
MANISH GUPTA, Jt. Secy.

Click to view notification

Payment of Gratuity (Amendment) Bill, 2017 : Increase maximum limit of gratuity in Private Sector

Payment of Gratuity (Amendment) Bill, 2017 : Increase maximum limit of gratuity in Private Sector

“Amendment will increase the maximum limit of gratuity of employees, in the private sector and in Public Sector Undertakings/ Autonomous Organizations…”

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

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 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.

Background:

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 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.

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.

Retirement Gratuity Ceiling hiked to Rs.20 lakh for bank employees and officers – AIBEA

7th CPC increased Gratuity Ceiling limit – 20 lakh from 1.1.2016

Payment of Gratuity (Amendment) Bill, 2017 : Increase maximum limit of gratuity in Private Sector

Non-Payment of Gratuity and Pay Revision Arrears by HEC

Non-payment of gratuity and arrears by HEC

Department of Heavy Industry has been receiving complaints of non-payment of gratuity and pay revision arrears by the Heavy Engineering Corporation (HEC), Ranchi to its retired employees. These complaints are forwarded to the Company for appropriate action and redressal of grievances.

As reported by HEC, twenty such complaints have been received by them through the Department during the last two years.

HEC has informed that the payment of gratuity to employees separated upto 31st March, 2014 has already been done except in a few deficient cases, due to specific technical reasons. Outstanding liabilities on account of gratuity payable to retired employees are Rs.50.28 crore. The same hasn’t been paid due to acute financial crisis faced by the Company. However, in case of daughter’s marriage, medical treatment of self and spouse, children’s higher education and remittance of bank’s outstanding loans, part payment of gratuity to ex-employees is being done, as per availability of funds. Regarding the payment of arrears on account of wage revision 1992 & 2007, a total of Rs.3.71 crore and Rs.24.70 crore (Approx.) respectively are outstanding.

HEC is a company registered under the Companies Act, with a separate legal identity under the Law. The Company is primarily responsible for managing all its affairs independently including meeting expenses related to its employees. Government of India being promoter of the company, has provided financial assistance to the Company in past from time to time in the form of loan, with a view to mitigate the hardship faced by their retired employees due to non-payment of gratuity timely. In the year 2014-15, a loan of Rs.47.89 crore was provided to the company for settlement of outstanding statutory dues (like gratuity etc.) of its employees.

This information was given by Minister of State in the Ministry of Heavy Industries and Public Enterprises Shri Babul Supriyo in reply to a written question in the Lok Sabha today.

Source: PIB News