The Payment of Gratuity Act, 1972 (the “Gratuity Act”) applies to establishments employing 10 (ten) or more persons. The main purpose for enacting the Gratuity Act is to provide social security to employees after retirement, whether retirement is a result of the rules of superannuation, or physical disablement or impairment of vital part of the body. The Gratuity Act has been amended and provides that the amount of gratuity payable to an employee shall not exceed the amount specified by the Central Government from time to time. The notification issued by the Ministry of Labour and Employment on March 29, 2018 has increased the maximum limit of gratuity payable to employees covered under the Gratuity Act to INR 20,00,000 (Indian Rupees Twenty Lakhs) from INR 10,00,000 (Indian Rupees Ten Lakhs).
In addition to the above, for the purpose of calculation of continuous service for employees on maternity leave, the notification by the Ministry of Labour and Employment has increased the total period of maternity leave to 26 (twenty six) weeks from 12 (twelve) weeks. This amendment is also by way of a notification from the Ministry of Labour and Employment and is in line with the amendments made to the Maternity Benefit Act, 1961.