Gratuity (Amendment) Bill passed: Here’s everything you need to know

New Delhi: The 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 din by the Lok Sabha on March 15.

The Bill will now be sent to President Ram Nath Kovind, whose assent will validate it as a law.

The passage of the bill paves the way for government to enhance the ceiling on tax-free gratuity to Rs 20 lakh from the existing Rs 10 lakh for formal sector 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.

Earlier, Rajya Sabha Chairman M. Venkaiah Naidu held a meeting with the leaders of different political parties and sought their cooperation for the passage of the Bill.

Hailing the passage of Bill as a historic move, the government thanked the opposition parties for their support.

Talking to reporters, Union Law Minister Ravi Shankar Prasad said: “It’s historic and an indication that this government is pro-worker and committed for their cause.”

He said that a group of ministers met the Chairman before the start of proceedings and urged him to pass the Bill, as it was for the workers.

“Without support of opposition parties it was not possible. Now, the workers will get benefits of the Bill,” he said, adding that the government would soon send the Bill to the President for his assent.

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

Employees are paid gratuity if they have offered 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 latest Bill removes the reference to 12 weeks and empowers the Central government to notify the maximum maternity leave period.

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

At present, the formal sector workers with five or more years of service are eligible for Rs 10 lakh tax-free gratuity after leaving job or at the time of superannuation.

The Payment of Gratuity (Amendment) Bill, 2017 was initiated in the Lok Sabha by Gangwar on December 18, 2017.