22/03/2018 Press Information Bureau
Payment of Gratuity (Amendment) Bill, 2018
passed by Parliament
Posted On: 22 MAR 2018 3:36PM by PIB Delhi
The Payment of Gratuity (Amendment) Bill, 2018 has been passed by parliament today.The
bill ensures harmony amongst employees in the private sector and 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. The bill was passed by the Rajya Sabha today
and the Lok Sabha on 15 March, 2018.
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
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.
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.
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.
After enactment of the Act, the power to notify the ceiling of the amount of
gratuity under the Payment of Gratuity Act, 1972 shall stand delegated to the Central
Government so that the limit can be revised from time to time keeping in view the increaAmount increased to Rs. 20 lakhs for all.se in
wage and inflation and future pay commissions.