The Union Cabinet has given approved introduction of the Payment of Gratuity (Amendment) Bill, 2017 in the Parliament.

Features of the Bill:

• The Bill seeks to amend Payment of Gratuity Act, 1972.
• The amendment seeks to revise the ceiling for employees in private sectors too, considering inflation and wage increase.
• The Amendment will increase maximum limit of gratuity of employees, in Public Sector Undertakings (PSUs)/Autonomous Organizations under Government and in private sector who are not covered under Central Civil Services (Pension) Rules, 1972, at par with Central Government employees.

The Payment of Gratuity Act, 1972

• The Payment of Gratuity Act, 1972 is an important social security legislation to wage earning population in industries, factories and establishments.
• It was enacted to provide social security to workmen after retirement, whether retirement is result of rules of superannuation, or physical disablement or impairment of vital body part.
• It applies to establishments employing 10 or more persons.

Background

• The present upper ceiling on gratuity amount under Act was Rs. 10 Lakh. The provisions for Union Government employees under CCS (Pension) Rules, 1972 with regard to gratuity are also similar.
• Before implementation of 7th Central Pay Commission, ceiling under CCS (Pension) Rules was Rs. 10 Lakh.
• However, with implementation of 7th Central Pay Commission from January 2-016, the gratuity ceiling was increased to Rs. 20 Lakhs.

Source: PIB