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The Payment Of Gratuity (Amendment) Act, 2018 - Notified

The Payment of Gratuity (Amendment) Bill, 2018 has been passed by Lok Sabha on 15th March, 2018 and by the Rajya Sabha on 22nd March, 2018, has been brought in force on 29th March, 2018.

Background: 1. 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 workman after retirement, whether retirement is a result 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.

2. 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 has been raised to Rs. 20 Lakhs.

3. Therefore, considering the inflation and wage increase even in case of employees engaged in private sector, this Government decided that the entitlement of gratuity should also be revised in respect of 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 to increase the maximum limit of gratuity to such amount as may be notified by the Central Government from time to time. Now, the Government has issued the notification specifying the maximum limit to Rs. 20 Lakh.

4. In addition, the Bill also envisages to amend the provisions relating to calculation of continuous service for the purpose of gratuity in case of female employees who are on maternity leave from ‘twelve weeks’ to ‘such period as may be notified by the Central Government from time to time’. This period has also been notified as twenty six weeks.

Major Impact: The Bill as passed by both the Houses of Parliament, and assented to by the Hon’ble President and notified by the Government. This will ensure harmony amongst employees in the private sector and in Public Sector Undertakings/ Autonomous Organizations under Government who are not covered under CCS (Pension) Rules. These employees will be entitled to receive higher amount of gratuity at par with their counterparts in Government sector.

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Ministry of Law and Justice (Legislative Department) Gazette Notification dated the 29th March, 2018:- The following Act of Parliament received the assent of the President on the 28th March, 2018, and is hereby published for general information:—

THE PAYMENT OF GRATUITY (AMENDMENT) ACT, 2018
NO. 12 OF 2018

An Act further to amend the Payment of Gratuity Act, 1972. BE it enacted by Parliament in the Sixty-ninth Year of the Republic of India as follows:—

1. Short title and commencement. (1) This Act may be called the Payment of Gratuity (Amendment) Act, 2018. (2) It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint.

2. Amendment of section 2. In the Payment of Gratuity Act, 1972 (hereinafter referred to as the principal Act), in section 2, for clause (k), the following clause shall be substituted, namely:—

'(k) "notification" means a notification published in the Official Gazette and the expression "notified" shall be construed accordingly;'.

3. Amendment of section 2A. In section 2A of the principal Act, in sub-section (2), in the Explanation, in clause (iv), for the words "twelve weeks", the words "such period as may be notified by the Central Government from time to time" shall be substituted.

4. Amendment of section 4. In section 4 of the principal Act, in sub-section (3), for the words "ten lakh rupees", the words "such amount as may be notified by the Central Government from time to time" shall be substituted.

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Ministry of Labour and Employment Gazette Notification S.O. 1419(E) dated the 29th March, 2018.— “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.”

Ministry of Labour and Employment Gazette Notification S.O. 1420(E) dated the 29th March, 2018.— “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.”

Ministry of Labour and Employment Gazette Notification S.O. 1421(E) dated the 29th March, 2018.— “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.”

2 comments:

  1. It is quite ridiculous on part of the Central Government as the date of implementation of amended Gratuity Payment act will be effective from 29.03.2018 while as per 7th Pay commission ,the Central Government Employees will get the revised Gratuity w.e.f.01.01.2016.While acted as an Executive in a CPSU,I was supeannuted on 31.01.2017. It's a gross misdeeds by the Government
    to do such h injustice to the Public Sector/Privatè organisations to be deprived of the benefit of 20 lakh gratuity from 29.03.2018 while the Central Government Employees will get the revised Gratuity w.e.f 01.01.2016.It is really an unjust decision by the Government and revert the same to 01.01.2016 in line with the Central Government Employees.

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  2. AS PER THE GRATUITY ACT 2018 THE CENTRAL GOVERNMENT IS EMPOWERED TO NOTIFY THE EFFECTIVE DATE RETROSPECTIVELY FROM 1-1-2016 THEREBY DOING JUSTICE TO PRIVATE EMPLOYEES AND THUS ENSURE HORMONY AMONG PRIVATE SECTOR EMPLOYEES.

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