Private sector gratuity to soar

Workers in private firms could see maximum payout double to Rs. 20 lakh

February 21, 2017 11:41 pm | Updated 11:54 pm IST - New Delhi

Soon private sector workers could receive gratuity up to ₹20 lakh, doubling the present maximum payout of ₹10 lakh that they are eligible to get after leaving an organisation after five years of continuous service.

The move is aimed at bringing parity between public and private sector workers after the gratuity limit was raised for central government employees from ₹10 lakh to ₹20 lakh as part of the Seventh Pay Commission recommendations accepted by the Centre in July 2016.

Consultative meeting

The labour ministry has called a meeting with trade unions, industry and State governments on Thursday to discuss the proposal to increase the gratuity ceiling by amending the Payment of Gratuity Act, 1972.

“With implementation of the Seventh Central Pay Commission, (gratuity) ceiling now is ₹20 lakh. In the past, the ceiling amount of gratuity under the Payment of Gratuity Act, 1972, has followed the Pay Commission recommendations,” the Union labour ministry said in its proposal dated February 15.

“Therefore, considering the inflation and wage increase, even in case of employees engaged in private sector, the entitlement of gratuity needs to be revised.”

At present, employees who complete five years of continuous service are eligible to receive gratuity when they leave the organisation. The gratuity ceiling was last revised from ₹3.5 lakh to ₹10 lakh in 2010 after the Sixth Pay Commission recommendation had raised the limit for central government employees.

Following the stakeholders’ discussion, the proposal will go to the Union Cabinet and be subsequently tabled in the Parliament. In a bid to avoid Parliamentary hurdles, the Centre has further proposed empowering itself with changing the gratuity ceiling through a notification in future.

Union demand

“We will raise two issues in the meeting,” said Pawan Kumar, zonal organising secretary at RSS-affiliated Bharatiya Mazdoor Sangh (BMS). “One, the calculation for gratuity payment should increase from 15 days to 30 days. This will help the low wage workers, too. Second, the gratuity should be given to workers who have completed three years of continuous service instead of five years at present,” he said. At present, gratuity is computed at 15 days salary for each completed year of service.

All India Trade Union Congress Secretary D.L.Sachdev said the gratuity payment ceiling should be increased retrospectively from January 1, 2016, as was done for central government employees.

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