Gratuity Rules 2020:
Gratuity new rules 2020 – If you are employed, then there is good news for you. Now the rule of gratuity has changed for employees. Let’s know about all the rules related to gratuity …
Three Labor Code Bills have been passed in Parliament. These include Occupational Safety, Health and Working Conditions Bill – 2020, Industrial Relations Bill – 2020 and Social Security Bill – 2020. Chapter 5 of the Social Security Bill, 2020 gives information about the rule of gratuity. Let’s know about it ….
First of all, we know about gratuity –
In addition to salary, pension and provident fund, gratuity is also given to the employees working in the same company for a long time. Gratuity is the reward received by an employee from the company. If the employee fulfills certain conditions of the job, gratuity will be paid to him under a prescribed formula in a guaranteed manner. A small portion of gratuity is deducted from the salary of the employee, but the major portion is paid by the company.
What the new rule says about gratuity rules 2020 –
the government has made this arrangement for fixed-term employees i.e. those working on contract. Even if someone works with a company on contract for a fixed term of one year, they will get gratuity. The employee working on the contract is now given social security rights like a regular employee. Apart from the contract employees, those working in the seasonal establishment will also be given the benefit.
Who will get the benefit of this gratuity act 2020?
Tell you that the old rule will continue for others. At present, gratuity is fixed on the basis of salary of 15 days every year on completion of five years job. The gratuity is given to the employees on behalf of the company. Its maximum limit is 20 lakh rupees. The employee worked for 20 years in the same company and his final salary is 60 thousand rupees. This salary is divided by 26, as 26 days are considered for gratuity. This will yield an amount of Rs 2,307.
Contract workers will get the benefit –
not a minimum term condition for fixed term employees – Under this, provision has been made for payment of gratuity for fixed term employees. And there will be no condition for minimum service period. For the first time, a fixed-term employee who is working for a specified period is given the right to social security like a regular employee. Fixed term refers to the employees working on the contract.
Now when you will get the gratuity money –
Chapter 5 states that gratuity will be paid for giving five consecutive years of service to the employee at the end of the job. It will be on retirement, retirement or resignation, death or disability from accident or illness. However, in the case of a working journalist, it will be three years instead of five years. Also, five consecutive years of service will not be necessary where the death or disability of an employee or fixed term appointment or any such notice notified by the central government.
New gratuity rules 2021
The Ministry of Labor and Employment has finalized the rules under the Four Labor Code. The new labor law is set to be implemented from April 1, 2021.
Experts say that companies will have to make changes in their CTC (cost to company) and allowances when the new labor law comes into force. This is because according to the new law, the allowances of an employee cannot exceed 50 per cent of the total salary. To comply with this rule, employers will have to increase the basic salary of their employees by 50 per cent. Limiting the allowance to 50 percent of the total salary will also increase the employer’s payment on staff gratuity, which is paid to the staff working in a company for more than five years. This will give employees more benefits on retirement than before.
As per the new definition, bonus, pension and PF contributions, conveyance allowance, HRA, overtime and gratuity will have to be excluded from salary. That is, the share of the basic salary will have to be kept at 50 percent or more. It is believed that after the new labor law, there will be a big change in salary structure. This would mean that in-hand pay of employees could be cut. On the other hand, the deduction in the name of social security scheme like Provident Fund (PF) will increase.
Gratuity act
As per the Gratuity Act, 1972, an employee is paid 15 days salary as gratuity in each year of his service. In this act, employees are those whom the company puts on the pay roll, the trainees do not get gratuity. No tax has to be paid on the amount received up to 20 lakhs under the gratuity, as well as this law is applicable in such establishments where the number of employees is at least 10.
How is the amount received by the employee calculated (gratuity calculation)
Payment of Gratuity Act, 1972
Under the Payment of Gratuity Act, 1972, it benefits every employee of the institution where more than 10 employees work. If the employee changes the job, retires or leaves the job due to any reason but he meets the rules of gratuity, he gets the benefit of gratuity.
How is the amount calculated
It has a fixed formula.
Total gratuity amount = (last salary) x (15/26) x (how many years worked in the company).
Suppose an employee worked in the same company for 20 years. The last salary of that debtor is 75000 rupees (including basic salary and dearness allowance).
Here only 26 days in a month are counted, because it is believed that 4 days is a holiday. At the same time gratuity is calculated on the basis of 15 days in a year.
Total gratuity amount = (75000) x (15/26) x (20) = 865385 rupees
In this way, the total amount of gratuity will come to Rs 8,65,385, which will be paid to the employee.
Another special information
Under this formula, if an employee works more than 6 months, it will be calculated as one year. For example, if an employee works for 7 years and 8 months, then he will be considered as 8 years and on this basis the amount of gratuity will be made. At the same time, if 7 years works for 3 months, then it will be considered as 7 years only.
