The development comes days after a report on social security code by the Parliamentary Committee on Labour recommended that the eligibility period for gratuity payable to an employee on termination of his employment should be cut down
Government is considering relaxing the minimum eligibility condition for gratuity payments to employees. The criteria may be reduced between one and three years from five years amid increasing uncertainty in job security. The development comes days after a report on social security code by the Parliamentary Committee on Labour recommended that the eligibility period for gratuity payable to an employee on termination of his employment should be cut down to one year from the current norm of five years.
“There is demand from several quarters to lower the gratuity threshold. How to take it forward and lower the five-year threshold is a subject on the table; it is likely to be lowered,” Mint reported citing unidentified government official.
“There are two options-pro-rata basis or proportional change for a few sectors, or a reduction in the five-year threshold for all sectors. Demand for the second option has more takers in the normal discourse with experts and economists. The standing committee has suggested to lower it to 1-3 years from the current five years,” the report also quoted the official as saying.
The gratuity is received by a person only if he has completed a minimum of five years of continuous service with an organisation. But, it can be paid before the completion of five years at the death of an employee. He may also receive it in case of disability due to an accident or disease.
Meanwhile, the Parliamentary Committee report had also highlighted the concern that the threshold limit of twenty or more employees for Employees’ Provident Fund Organisation (EPFO) registration can be used by the employers to exclude themselves from the EPFO coverage.
