Gratuity is a critical monetary benefit to employees in recognition of their long service and support after retirement or under unforeseen circumstances. In India, all those who work in different sectors, including factories, mines, oilfields, plantations, ports, railways, motor transport undertakings, and shops or establishments employing ten or more workers, come under the Purview of the Payment of Gratuity Act. Through this Act, the payment of gratuity shall be at the rate of 15 days’ wages for every completed year of service subject to a maximum limit and has also changed over the years.
Current Recent Amendments and Eligibility Criteria
Increasing gratuity amount from 20 lakh to 25 lakh with effect from January 1, 2025, under raised ceiling for central government employees after the enhancement of Dearness Allowance (DA) by 50%. As a result, The Retiring shall be given greater financial security.
1 Thus, to get the maximum gratuity benefit of 25 lakh, the following provisions shall apply to government employees:
2 Length of Service: Continuous service of at least 20 years will be required. Employees with shorter tenures will get calculated gratuity amounts.
3 Nature of Employment: Only government employees can qualify. Rights of a contractual or temporary employee may differ.
4 Retirement Age: It will apply to those retiring at the age of 60 as per rules. Those retiring prior to this may be given a prorated amount.
5 Disciplinary Record: Pending disciplinary action or records of serious misconduct may lead to deductions or disqualification for the gratuity payment.
Major Changes were made to the Uttar Pradesh Retirement Benefits Rules, 1961 in November 2024. Earlier, a gratuity amount collected would revert to government custody if an employee died without a nominee or surviving family members. This now permits payment of gratuity based on the succession certificate provided by the court, which would ensure rightful heirs get these benefits.
Gratuity Computation
The last drawn salary, that is, the basic plus dearness allowance has been considered here, while dividing this by 26 to take the calculations to account for as four weekly offs in a month. This will ensure fair computation of gratuity according to an employee’s tenure and earnings.
Conclusion
It remains a criterion for benefits of employees in India regarding the nation’s commitment to worker welfare. Recent enhancements such as an increase in gratuity ceilings and all amendments at state-specific rules like those from Uttar Pradesh mark the progressive trend toward guaranteeing all-rounded financial security for employees and their families.
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