Date April 5, 2018
The Payment of Gratuity Act, 1972 amended – Gratuity limit raised to Rupees two million

The President of India on 28 March 2018 gave his assent to the Payment of Gratuity (Amendment) Act, 2018 (Amendment Act), thereby amending the Payment of Gratuity Act, 1972 (Act) and which was brought into effect on 29 March 2018 through a notification issued by the Ministry of Labour and Employment, Government of India (MoLE). Through the Amendment Act the Indian government aims to revise the gratuity limit for the employees engaged in private sector and public sector undertakings/ autonomous organizations under the government, to be at par with their counterparts employed in the government sector, thus ensuring harmony.

 

The Amendment Act empowers the Government of India to revise the amount of gratuity payable to employees under the Act, from time to time by way of notifications. Therefore, the Amendment Act does away with the erstwhile ceiling of INR 1,000,000 (Rupees one million) payable as gratuity under the Act. The aforesaid amendment has been brought keeping in view the future inflation, increase in wage amount, and pay commissions. Accordingly, through a notification dated 29 March 2018 the MoLE specified that the amount of gratuity payable to an employee under the Act shall not exceed INR 2,000,000 (Rupees two million).

 

Also, prior to the notification of the Amendment Act, for the purpose of calculation of the number of days on which an employee has actually worked under an employer, a period of only 12 (twelve) weeks was included therein for a female employee on maternity leave. However, the Amendment Act removes such reference to the period of 12 (twelve) weeks and empowers the Government of India to notify such period from time to time. Accordingly, through a notification dated 29 March 2018 the MoLE specified that for the aforesaid purpose, the total period of maternity leave in case of a female employee shall not exceed 26 (twenty six) weeks.

 

The complete text of the Amendment Act may be accessed at:

http://www.egazette.nic.in/WriteReadData/2018/184298.pdf

 

The notifications issued by MoLE may be accessed at:

http://egazette.nic.in/WriteReadData/2018/184299.pdf