Private sector employees may soon have reasons to cheer, thanks to the 7th Central Pay Commission (CPC). The Narendra Modi government could hike the ceiling on gratuity payable to them from the current Rs 10 lakh to Rs 20 lakh. The government had accepted the hike for Central government employees as proposed by the 7th CPC.
Read: Allowances could be hiked effective from April, higher HRA possible
If it indeed happens, the move could have significant financial implications on the private sector, which had expressed concern when the government raised the eligibility limit for the bonus.
The union labour ministry is reportedly scheduled to take up the subject at its meeting on Thursday with trade unions and state governments that would result in appropriate amendments to the Payment of Gratuity Act, 1972.
"With implementation of the Seventh Central Pay Commission, (gratuity) ceiling now is Rs 20 lakh. In the past, the ceiling amount of gratuity under the Payment of Gratuity Act, 1972, has followed the Pay Commission recommendations.
"Therefore, considering the inflation and wage increase, even in case of employees engaged in private sector, the entitlement of gratuity needs to be revised," the Hindu quoted the union labour ministry's February 15 proposal as saying.
The CPC had recommended raising the ceiling on payment of gratuity, citing representations from employees. "The Commission notes that there is merit in the argument advanced to index the ceiling on gratuity so that the benefits of the enhanced ceiling are available to personnel in a manner which is more even over a time frame. The Commission recommends enhancement in the Report of the Seventh CPC 390 Index ceiling of gratuity from the existing ₹10 lakh to ₹20 lakh from 01.01.2016."
The decision, if taken, may have implications during the ongoing Assembly elections. Uttar Pradesh is yet to complete polling, with four more phases of elections due on February 23, 27 and March 4 and 8. Manipur goes to polls on March 4 and 8.
The results, along with those for elections held in Punjab, Manipur, Goa and Uttarakhand, will be declared on March 11.
The outcome will be keenly awaited, especially of Uttar Pradesh where the stakes are high for the Bhartiya Janata Party (BJP) since it sends the largest number of MPs to the Rajya Sabha, where the BJP-led NDA is currently in a minority and therefore unable to push through legislations ushering labour and other economic reforms.
The Modi government is yet to take a decision on raising allowances paid to Central government employees, as proposed by the pay panel. The government was apparently restrained by the model code of conduct that kicked-in after the poll schedule was announced on January 4.
The CPC examined 196 allowances and gave its recommendations on abolishing or raising some of them while recommending others to be subsumed with other perks.
The 7th CPC proposals cover 47 lakh Central government employees and 53 lakh pensioners, of which 14 lakh employees and 18 lakh pensioners are from the defence forces.
