Parliament passes Payment of Gratuity (Amendment) Bill


New Delhi : Parliament on Thursday passed The Payment of Gratuity (Amendment) Bill which seeks to empower the government to fix the period of maternity leave and the tax-free gratuity amount with an executive order.

The Bill got Parliament’s approval after it was passed by the Rajya Sabha through a voice vote. It was passed amid a din by the Lok Sabha on March 15.

After the passage of the Bill in Parliament, the government will be able to enhance the ceiling of tax-free gratuity to Rs 20 lakh from the existing Rs 10 lakh for employees under the Payment of Gratuity Act.

Labour Minister Santosh Kumar Gangwar moved The Payment of Gratuity (Amendment) Bill, 2017, which was passed by a voice vote without any discussion.

“I would urge the chair to pass the Bill without discussion,” said Gangwar while moving the Bill.

The Payment of Gratuity Act, 1972 allows for the payment of gratuity to employees in any establishment, factory, mine, oil field, plantation, port, railways, company, or shop employing 10 or more workers.

Employees are paid gratuity if they have provided at least five years of continuous service at the time of termination.

This Bill empowers the Central government to notify the period of maternity leave eligible for qualifying as continuous service and determine the amount of gratuity available to employees.

The maximum maternity leave, for the purpose of calculating continuous service under the Act, was based on the maternity leave provided under the Maternity Benefit Act, 1961.

The maximum maternity leave under the 1961 Act was changed from 12 weeks to 26 weeks by the Maternity Benefit (Amendment) Act, 2017. The Bill removes the reference to 12 weeks and empowers the Central government to notify the maximum maternity leave.

Under the Act, the maximum amount of gratuity payable to an employee cannot exceed Rs 10 lakh. The Bill removes the existing ceiling and states that the ceiling may be notified by the Central government.



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