After approving the 100% increase in wage ceiling for calculating bonus payable under the Payment of Bonus Act in October, the Modi government is apparently at yet another employee-friendly move: lower the tenure for gratuity entitlement.
"We have proposed amendments to the Payment of Gratuity Act of 1972 to lower the five-year service period for gratuity eligibility to three years, while allowing employees who change jobs to transfer their gratuity benefits to the new employer," The Hindu quoted a senior government official as saying.
The amendment, if approved, will go a long way in ensuring that job hoppers are not denied of their rightful employment benefit.
The current provisions of gratuity ensure payment of tax-free gratuity benefits of up to Rs 10 lakh, but on condition that the beneficiary-employee had put in five years of continuous service in the same entity.
The Union Cabinet had earlier approved the raised ceiling for calculating bonus to Rs 7,000, in addition to enhancing the eligibility limit for payment of bonus, from monthly salary of Rs 10,000 to Rs 21,000.
The proposed increase in ceiling was announced by Bandaru Dattatreya, minister of state for labour and employment on 1 September this year in response to twelve demands made by trade unions.
