Gratuity Act raises unions’ hackles

The Payment of Gratuity (Amendment) Act, 2010, which was passed by Parliament in its last session, has raised the hackles of various trade unions.

The Act has raised the maximum limit of gratuity payable to an employee from Rs 3.5 lakh to Rs 10 lakh. Then why are the trade unions angry? It is the date of implementation of the Act, which has annoyed workers engaged in the private sector, public sector undertakings and the banking sectors, among others.

The upper limit of the gratuity for government employees was raised to Rs 10 lakh with effect from January 1, 2006, when the recommendations of the Sixth Pay Commission came into effect.

Immediately after that various trade unions demanded that a similar provision should be made for the employees of the private sector and public sector undertakings.

Conceding the demand, the government introduced the Payment of Gratuity (Amendment) Bill in Parliament. While passing the Bill, Parliament said the Act would come into force on such date “as the Central Government may, by notification in the official gazette appoint.”

The Act received the assent of the President on May 17 last and the Union Ministry of Labour and Employment notified it on May 24, stating that the Act would become effective from that day.

The trade unions say the notification is discriminatory. While for the government employees the maximum limit of gratuity has been revised with effect from January 1, 2006, for those of the private sector and the public sector undertakings it would be from May 24. Thus, the employees of these sectors, who retired between January 1, 2006 and May 24, 2010, would be sufferers.

SR Khatri, general secretary of the State Bank of India Employees Organisation, said the government had yielded to the pressure of various organisations of private employers, who did not want to pay enhanced gratuity to their employees retiring before May 24. He said the trade unions would agitate against this discrimination.

TN Goel, president of the State Bank of Indian Officers Federation, said it was highly unfair to the employees of the public sector banks, whose pay was revised with effect from November 2007. The notification should have taken care of this fact.

State secretary of the Haryana CITU Surender Malik said the enhanced gratuity should be payable to all with effect from January 1, 2006. He also demanded that various retirement benefits should not be subject to income tax.

source:tribuneindia.com