Apurva Kolwankar

Legislation Affected:Payment of Gratuity Act,1972 ("Principal Act")

Details:The Ministry of Labour and Employment ,vide a series of Notifications dated March 29,2018,has notified the Payment of Gratuity(Amendment)Act,2018 ("Amendment Act"),amending the Payment of Gratuity Act,1972 ("Principal Act") in relation to the ceiling on gratuity amount and the calculations of continuous service in case of leave availed by female employees.

The Key highlights of the Amendment Act are as follows:

1. In Section 4 (3) of the Principal Act, the maximum limit of gratuity has been amended to such amount as may be notified by the Central Government from time to time.

2. In Section 2 A (2) of the Principal Act, the provisions relating to calculations of continuous service for the purpose of gratuity in case of female employees who are on maternity leave have been amended from 12 weeks to such period as may be notified by the Central Government from time to time.

In view of the above-amended provisions, the Central Government has also notified the following vide separate Notifications:

1. Section 4 (3) of the Principal Act:  The ceiling on gratuity amount under the Principal Act has been raised to Rs. 20 Lakhs;

2. Section 2A (2) of the Principal Act: For calculations of continuous service for the purpose of gratuity, the number of days on which a female employee has actually worked under an employer shall include the days on which she has been on maternity  leave, so that the total period of such maternity leave does not exceed 26 weeks.

Effect: The Amendment Act has come into force on March 29, 2018 as per the date appointed in the Gazette. Affected/New Task IDs will be circulated shortly.

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