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The Modi government may soon reduce the eligibility for gratuity payment to employees from five years to one, a report in the Financial Express has said. According to the report, this may happen through a Bill on Social Security which is likely to be introduced by the Government in Parliament in the Winter Session.
What is the draft code on Social Security:
The Union Ministry of Labour and Employment had recently put a draft 'Code on Social Security 2019' for suggestions from the public and concerned stakeholders. The Ministry is inviting inputs and comments as part of pre-legislative consultative process. The last date for sending suggestion ended on October 25.
What does the draft code suggest about Gratuity:
- Gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years:
1. on his superannuation
2. on retirement or resignation
3. on death or disablement due to accident or disease
4. on termination of contract period under fixed term employment
5. on any such event notified by Central government
- The completion of continuous service of five years shall not be necessary where the termination of the employment of any employee is due to death or disablement or expiration of fixed term contract or happening of any such event as notified by Central government.
- For every completed year of service or part thereof in excess of six months, the employer shall pay gratuity to an employee at the rate of 15 days, wages or such number of days as notified by Central government. This would be based on the rate of wages last drawn by the employee concerned.
- In case of piece-rated employee, daily wages will be computed on the average of total wages received by him for a period of three months immediately preceding the termination of his employment. However, the wages paid for any overtime work shall not be taken into account.
- In case of an employee employed in seasonal establishment and who is not so employed throughout the year, the employer shall pay the gratuity at the rate of seven days' wages for each season.
What is the Bharatiya Mazdoor Sangh saying:
In a letter to the Labour Ministry, the Bharatiya Mazdoor Sangh said the draft code on social security is a "weak-cut-and-paste" job. The draft code is not universal, the BMS said. The labour union demanded that the gratuity eligibility should be reduced from five to one year.
Here, it is also pertinent to mention that no official announcement has been made by the government in this regard. We do not confirm the veracity of the report.
