7th Pay Commission: Gratuity limit hiked to Rs 20 lakh

On recommendation of 7th Pay commission panel, the Labour Ministry has decided to raise the gratuity payment limit from the existing Rs 10 lakh to Rs 20 lakh.

On February 23, the Labour Ministry and representatives from central trade unions met where the decision was taken, as reported by PTI.

Moreover, the unions also demanded for the removal of condition on having at least 10 employees in an establishment and minimum five years of service for payment of gratuity, the report said. 

Quoting All India Trade Union Congress (AITUC), the report said, "While accepting the maximum payment limit of Rs 20 lakh as an interim measure, the unions demanded that the ceilings/ limit with respect to number of employees and years of service should be removed."

Presently, under the Payment of Gratuity Act, an employee is eligible for gratuity amount only after the completion of minimum five years of service. 

As per the report, the unions demanded that the application of amended provision regarding maximum amount should be made effective from January 1, 2016 as done in the case of central government employees. 

Besides that rate of 15 days wages for each completed year of service be raised to 30 days wages, the unions demanded, the report added.