Gratuity: Parliamentary Panel Suggests Relaxing 5-Year Service Clause To A Year

In the latest presented report, the Parliamentary Standing Committee on Labour has made a suggestion that the continuous serving term of 5 years for gratuity payment eligibility should be reduced to one year. Further this clause of five years in employment is seen as an incentive for employers whereby they terminate employees before this term to avoid this payment to employees.

Gratuity: Parliamentary Panel Suggests Relaxing 5-Year Service Clause To A Year

The suggestion comes at a time when jobs were cut off across sectors amid disruption due to the pandemic.

Biju Janata Dal MP Bhartruhari Mahtab headed committee is of the view that the country's labour market should be considered here where most people are in job for the short term. And thus ineligible for gratuity payment because of the 5-year continuous working clause.

The Code of Social Security, 2019 report lists out the recommendation which was put before Lok Sabha Speaker on July 31. Another suggestion was that this gratuity benefit should be for all employee categories including contract labourers, seasonal workers, piece-rate workers, daily/monthly wage workers.

"The benefit of the pro-rata gratuity should be extended to the contract labour if they serve for the full period of the contract irrespective of the change of contractors. The principal employer should be liable to pay pro-rata gratuity for the term of the contract and it may be paid along with the last wages," the report noted.

The formula for calculation of gratuity payable to different category of workers should be given in the code itself, instead of resorting to notifications at a later stage, added the committee.

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