Exclusive! Gratuity payment rules may change, employees set to benefit in big way

Gratuity Payment: An employee's Gratuity is a loyalty benefit being given by the employer for serving the organisation for continuous five years or more.

As per the Payment of Gratuity Act 1972, an employee becomes eligible for Gratuity benefits once five years of continuous service at the organisation have been completed.

Gratuity Payment: An employee's Gratuity is a loyalty benefit being given by the employer for serving the organisation for continuous five years or more. As per the Payment of Gratuity Act 1972, an employee becomes eligible for Gratuity benefits once five years of continuous service at the organisation have been completed. This act clearly mentions that if there are 10 or more employees working in any company, then the recruiter is bound to give Gratuity benefit to the employee under the Payment of Gratuity Act. Now, things may change and new benefits may come for employees.

Zee Business expert Manish Gupta said, during the Money Guru show, that the government is mulling to amend the act by bringing in some changes. Among these is to make employees eligible for gratuity benefit in less than five years.

Speaking on the changes that may take place in the Payment of Gratuity Act 1972, Manish Gupta said, "The government is mulling to make an employee eligible for gratuity benefits after one yea. In fact, provision for making an employee eligible for this benefit after completion of anything between 1 to 3 years of regular service is under consideration." If that happens, then to become eligible for Gratuity benefit, five-year minimum term of service will no more remain applicable on employees.

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Gupta said that government is well aware about the decrease in job security in the last few years, especially after the COVID-19 pandemic. He said that in most of the cases, a recruiter keeps monthly gratuity as part of the CTC of an employee. So, in the case of job loss due to any reason, recruiter shuns the monthly gratuity contribution in case the tenure of service is less than five years.

"The Central government is planning to keep gratuity contribution on the lines of PF contribution by making the monthly gratuity as part of an employee's CTC," concluded Mishra.

In current scenario, an employee is eligible for the Gratuity benefit before completion of five years if the employee is unable to perform his or her duty, or become handicapped post-recruitment or in case of death of the employee.

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