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Payment of Gratuity (Amendment) Bill, 2017

Published on September 13, 2017
The Union Cabinet chaired has given its approval to introduce of the Payment of Gratuity (Amendment) Bill, 2017 in the Parliament.

Payment of Gratuity (Amendment) Bill, 2017

Highlights of the bill

  • This bill will increase the maximum limit of gratuity of employees, in the private sector and in Public Sector Undertakings/ Autonomous Organizations under Government who are not covered under CCS (Pension) Rules, at par with Central Government employees.
  • The main purpose for enacting this Act is to provide social security to workmen after retirement, whether retirement is a result of the rules of superannuation or physical disablement or impairment of vital part of the body.
  • The present upper ceiling on gratuity amount under the Act is Rs. 10 Lakh.

Background of the bill

  • The Payment of Gratuity Act, 1972 applies to establishments employing 10 or more persons. 
  • 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 now is Rs. 20 Lakhs effective from 1.1.2016.
  • Considering the inflation and wage increase
  • the Government is of the view that the entitlement of gratuity should be revised for employees who are covered under the Payment of Gratuity Act, 1972.

What is Central Pay Commission?

  • Pay Commission is set up by Government of India
  • It gives its recommendations regarding changes in salary structure of its employees. 
  • Since India's Independence, seven pay commissions have been set up on a regular basis to review and make recommendations on the work and pay structure of all civil and military divisions of the Government of India. 
  • It is headquartered in Delhi.
  • Commission is given 18 months from date of its constitution to make its recommendations

Seventh Pay Commission

  • On September 25, 2013 then Finance Minister P Chidambaram announced that Prime Minister Manmohan Singh has approved the constitution of the 7th Pay Commission.
  • Justice Ashok Kumar Mathur is the head of the Seventh Pay Commission.
  • Vivek Rae: Member (Full Time)
  • Dr. Rathin Roy: Member (Part Time)
  • Meena Agarwal: Secretary

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