Mar 5, 2010
The Cabinet on Thursday approved an amendment to the Gratuity Act to raise the ceiling from Rs 3.5 lakh to Rs 10 lakh. The Bill to amend the Act will now go to Parliament, a government official told.
Every salaried person, who has completed five years of government or private sector service, is eligible for half a month’s salary as gratuity for every completed year of service. But the gratuity pay of those with higher salaries is now limited at Rs 3.5 lakh.
The proposed amendment raises this to Rs 10 lakh.
Every employer with more than ten salaried workers is mandated to provide gratuity to the eligible employees.
Many companies, however, do not keep the gratuity liability adequately funded. That is, they make provisions for future payment, but do not set aside funds towards the future payment. Listed companies are expected to disclose their gratuity liability.
The newly passed Amendment to Gratuity Act in the previous session of the Parliament by voice vote increasing gratuity ceiling from Rs.3.5 lakhs to Rs.10 lakhs was made effective from 24.05.2010 by Govt against the request of the Employees/Trade Unions, to make it effective from 1.1.2006. Due to this, thousands of PSU employees who retired prior to 24.05.2010 were deprived of the enhanced benefit, which is substantial for an employee. The employees who retired prior to 24.05.2010 were the real sufferers due to inflation, erosion in the value of long term savings...etc. Among the employees who worked for the last 30 to 35 years, those who retired after 24.5.2010 get higher gratuity(difference around R.6.5 lakhs). This is discriminatory, as the same was made applicable to Central Govt employees from 01.01.2006. Due to lack of proper forum for the retirees, the issue didnot get the attention it deserves. It appears that individual representations made by employees through letters to our Hon. P.M, F.M,Labour Minister, were totally ignored till date.This has resulted in creating health anxiety to many retirees from 1.1.2006 to 23.05.2010. Who will make the voice of retired heard in Rajyasabha &Loksabha in the monsoon session of parliament.
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