After bringing teachers under the Payment of Gratuity Act, the Government is now proposing to raise the ceiling for payment of gratuity to private sector employees from Rs 3.5 lakh to Rs 10 lakh.
A decision in this regard is likely to be taken at the next Cabinet meeting scheduled for January 9, sources in the Labour and Employment Ministry said.
The Cabinet's nod will bring parity between Government and private sector employees in enjoying equal gratuity benefits. The Sixth Pay Commission recommendation had raised the limit for Central government employees.
The trade unions and other bodies had been pressing for raising the ceiling for private sector employees. In fact, some trade union bodies had insisted against fixing any upper ceiling but the Labour Ministry was of the view that this would put burden on the employers, sources said.
The Ministry had held consultations with various stakeholders about raising the ceiling, they said.
In the last Parliament session, the Centre had amended the Gratuity Act to clarify the definition of an employee. According to the new law, anybody who is earning a wage is characterised as an employee and is liable to receive gratuity.
National Aluminium Company became the first public sector undertaking to move its employees retirement funds to the New Pension System to contribute six per cent of the basic pay into the NPS.
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