Gratuity Amendment Bill 2017
The Gratuity Act Amendment 2017 bill is already passed in the parliament. The amendment is clearly increasing the ceiling of the gratuity amount for the employees. However, the gratuity eligibility requires an employee to be with the company for more than 5 years. Gratuity is a kind of employee benefit scheme for the private sector and public sector employees. Find the latest amendment bill 2017 details here. Myepfbalance.co.in is providing information on various pension plans and employee benefits.
Before we get to the gratuity act amendment 2017, let us see the gratuity payment act 1972 for details. The Act 1972 of Gratuity applies to the organizations who are hiring more than 10 employees.
Background – Gratuity Act Amendment 2017
The main motive of the gratuity is to give economic security to the employees after leaving a job or after retirement. Even if the person is retiring due to any disability or superannuation rules, he or she is eligible for gratuity.
The upper ceiling on the amount of gratuity under the Act was Rs. 10 lakhs. However as the 7th pay commission came in, the ceiling increased to Rs. 20 lakhs. The ceiling of Rs. 20 lakhs was effective from 1st January 2016.
Considering the rate of inflation, the government initiated gratuity act amendment bill 2017.
Gratuity Notification 2017
The gratuity notification regarding the amendment bill 2017 also applies to the employees of the private sector. Hence, the maximum limit for the amount receivable under gratuity is Rs.20 lakhs.
However, the gratuity act amendment bill applies only to the employees who are on the payroll. The amendment or the gratuity act 1971 does not apply to the contractual employees.
Gratuity for Bank Employees
Gratuity is one of the most significant retirement benefits for the employees of the banking sector as well. The bank employees get Gratuity Act either under the Gratuity Act 1972 or under BPS/OSR. While there is a maximum limit under the Gratuity Act, there is no maximum limit under BPS/OSR. When any bank employee retires, the gratuity is calculated both the ways. The higher amount of the both is finally paid as a gratuity to the bank employee.
Also note, in SBI, the gratuity is calculated only by the formula provided under the Act. The ceiling applies as per the gratuity act amendment 2017. Until now, the ceiling of Rs.10 lakhs was applied. In other banks, the gratuity amount is calculated using both the ways and the higher one is followed.
For example, if any bank officer is retiring, he or she is eligible for gratuity. If the gratuity is rs. 6 lacs under BPS and Rs. 9 lacs under the gratuity act, Rs. 9 lacs will be paid to the employee as a gratuity.
Gratuity act amendment 2017 brings good news for millions of employees of the private sector and the public sector. You may also check our blog for all information on various retirement benefits like pension and provident fund.
Stay with us to learn more about gratuity act amendment 2017.