In a recent press note, the Ministry of Labour and Employment (“Ministry”) has informed the general public regarding the notification of the Payment of Gratuity (Amendment) Bill, 2018 which was enforced on March 29, 2018.
The press note highlights the impact of the amendment, which is intended at ensuring harmony amongst employees in the private sector and in Public Sector Undertakings/Autonomous Organizations under the Government who are not covered under CCS (Pension) Rules.
Background
By way of Notification S.O. 1419 (E), the Ministry, by has notified that the Payment of Gratuity (Amendment) Act, 2018 (“Amendment Act”). The amendment has become effective since March 29, 2018.
Key Highlights of the Amendment are:
| Principal Act | Amendment Act | Impact |
| Section 2(k) Notification
“notification” means a notification published in the Official Gazette. |
Section 2(k) Notification
“notification” means a notification published in the Official Gazette and the expression “notified” shall be construed accordingly. |
The Amendment Act has added the term “notified”, which means that ‘notified’ will imply only those notification which have been published in the official gazette.
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| Section 2A Continuous Service
[….Explanation.- For the purpose of clause (2), the number of days on which an employee has actually worked under an employer shall include the days on which (i) he has been laid-off under an agreement or as permitted by standing orders made under the Industrial Employment (Standing Orders) Act, 1946 (20 of 1946), or under the Industrial Disputes Act, 1947 (14 of 1947), or under any other law applicable to the establishment; (ii) he has been on leave with full wages, earned in the previous year; (iii) he has been absent due to temporary disablement caused by accident arising out of and in the course of his employment; and (iv) in the case of a female, she has been on maternity leave; so, however, that the total period of such maternity leave does not exceed twelve weeks]
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Section 2A Continuous Service
[….Explanation.- For the purpose of clause (2), the number of days on which an employee has actually worked under an employer shall include the days on which (i) he has been laid-off under an agreement or as permitted by standing orders made under the Industrial Employment (Standing Orders) Act, 1946 (20 of 1946), or under the Industrial Disputes Act, 1947 (14 of 1947), or under any other law applicable to the establishment; (ii) he has been on leave with full wages, earned in the previous year; (iii) he has been absent due to temporary disablement caused by accident arising out of and in the course of his employment; and (iv) in the case of a female, she has been on maternity leave; so, however, that the total period of such maternity leave does not exceed such period as may be notified by the Central Government from time to time]
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The amendment has done away with the provision of maternity leave for a maximum of twelve weeks only. Instead, it has added that the period of the maternity leave will be notified by the Central Government from time to time.
The total period of maternity leave allowed at present is for twenty-six weeks.
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| Section 4(3) Payment of Gratuity
The amount of gratuity payable to an employee shall not exceed ten lakh rupees. |
Section 4(3) Payment of Gratuity
The amount of gratuity payable to an employee shall not exceed such amount as may be notified by the Central Government from time to time” shall be substituted. |
The Amendment Rules have now made provision for employees in the Private sector to receive higher amount of gratuity at par with their counterparts in Government sector.
Pursuant to the Amendment, the ceiling amount of gratuity payable to an employee has been raised to Rs. 20 Lakh. .
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Source: Ministry of Labour and Employment
