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If decisions are made final, private sector employees could receive gratuity up to ₹20 lakhs, doubling up the existing limit of ₹10 lakhs after leaving an establishment with minimum 5 years of continuous service.


The move is intended to bring parity between private and public sector employees since as part of the Seventh Pay Commission recommendations the gratuity ceiling limit was raised for central government employees from ₹10 lakh to ₹20 lakh.

On Thursday, 23rd February, 2017, the labour ministry has called a joined meeting with representatives of State governments, trade unions and industry to discuss the proposal to increase the gratuity ceiling limit by amending the Payment of Gratuity Act, 1972.


With implementation of the Seventh Central Pay Commission, (gratuity) ceiling now is ₹20 lakh. In the past, the ceiling amount of gratuity under the Payment of Gratuity Act, 1972, has followed the Pay Commission recommendations,” the Union labour ministry said on February, 15th in its proposal.

Labour ministry added, “Therefore, considering the inflation and wage increase, even in case of employees engaged in private sector, the entitlement of gratuity needs to be revised.”

At present, employees who complete five years of continuous service are eligible to receive gratuity when they leave the organisation. The gratuity ceiling was last revised from ₹3.5 lakh to ₹10 lakh in 2010 after the Sixth Pay Commission recommendation had raised the limit for central government employees.

Demand of Trade Unions:

Mr. Pawan Kumar, Zonal Organising Secretary of Bharatiya Mazdoor Sangh (BMS) said, “We will raise two issues in the meeting. One, the calculation for gratuity payment should increase from 15 days to 30 days. This will help the low wage workers, too. Second, the gratuity should be given to workers who have completed three years of continuous service instead of five years at present”. At present, gratuity is only computed at 15 days salary for each completed year of service of an employee with minimum 5 years continuous service.

Mr. D.L.Sachdev, Secretary, All India Trade Union Congress said, the gratuity payment ceiling limit should be increased retrospectively from January 1, 2016, as given for central government employees.

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