Parliament passes Payment of Gratuity Bill

Parliament on 23 March 2018 passed a key bill that will empower the government to fix the amount of tax-free gratuity and the period of maternity leave with an executive order. The Rajya Sabha, which failed to transact any significant business over the last fortnight due to protests by various parties, on 23 March 2018 passed the Payment of Gratuity (Amendment) Bill without discussion.

The Lok Sabha gave its approval to the important bill last week. The legislation will enable the government to enhance the ceiling of tax-free gratuity to Rs. 20 lakh from the existing Rs. 10 lakh for employees falling under the Payment of Gratuity Act.

After the implementation of the 7th Pay Commission, the ceiling of gratuity amount for Central government employees was doubled to Rs. 20 lakh. It also allows the government to fix the period of maternity leave for female employees as deemed to be in continuous service in place of the existing 12 weeks. The amendment to the payment of gratuity law comes in the backdrop of Maternity Benefit (Amendment) Act, 2017 enhancing the maximum maternity leave period to 26 weeks.

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