Why Is The Govt. Showing Double Standards In Implementing The Gratuity (Amendment) Act?

Posted by Jag mohan thaken in Business and Economy
April 10, 2018

Earlier this month, I received a WhatsApp message from a retired banker, Thakar Singh, talking about the effective date of issue for the payment of gratuity under the Gratuity (Amendment) Act, 2018. He asks, “Why is the central govt. claiming ‘Sabka Saath, Sabka Vikas’ when it is discriminating between central government employees and central government-managed bank employees while awarding the gratuity?” He adds, “While the effective date of the 7th Pay Commission for the central employees is w.e.f. 01.01.16, for the bankers the effective date for gratuity is 29.03.2018. What is the fault of all those bank employees who retired between 01.01.2016 and 28.03.2018? As the issue of gratuity was delayed by the government and not by the employees, this is completely unjust.”

Who Benefits From The Gratuity (Amendment) Act?

While presenting the Payment of Gratuity (Amendment ) Bill, 2017 before the Lok Sabha and Rajya Sabha, the Minister of State for Labour and Employment Santosh Kumar Gangwar stated the objects and reasons of the amendment bill:

“The Payment of Gratuity Act, 1972 (the Act) was enacted to provide for a scheme for the payment of gratuity to employees engaged in factories, mines, oilfields, plantations, ports, railway companies, shops or other establishments who have rendered a minimum five years of continuous service with the establishment employing 10 or more persons. The calculation of gratuity amount is based on a formula, which is 15 days of wages for each year of completed service, subject to a certain ceiling. The present ceiling, as provided under section 4 of the Act, is ₹10 lakhs which was fixed in the year 2010.

After implementation of the 7th Central Pay Commission, the ceiling of gratuity for Central Government employees has been enhanced from ₹10 lakhs to ₹20 lakhs. In the past, the ceiling amount of gratuity under the Act has followed the Central Pay Commission recommendations.

Therefore, considering the inflation and wage increase even in case of employees engaged in private and public sector, the entitlement of gratuity is also required to be revised for employees who are covered under the Act.

It has also been proposed  to  empower the Central Government to notify the ceiling proposed, instead of amending the  said Act, so that the limit can be revised from time to time keeping in view the increase in  wage and inflation, and future Pay Commissions.”

What Is The Bone Of Contention?

After getting the bill passed by Lok Sabha and Rajya Sabha, the Centre issued a gazette notification on March 29, 2018, which was to be effective from that day itself. This enables the government to enhance the ceiling of tax-free gratuity to ₹20 lakh from the existing ₹10 lakh for employees under the Payment of Gratuity Act. But now, this effective date (March 29, 2018) has become the bone of contention. All the employees waiting to be benefitted were sure of receiving equal benefits in the payment of gratuity.

Venkateshwar Reddy, National  Secretary General of the All India Regional Rural Bank Employees Association (AIRRBEA) says, “The working class in India were of the view that the amendment provision of enhanced ceiling up to ₹20 lakh will be effective from 01.01.2016, the date from which the central government employees have been allowed the revised limit.”

But, the question of why the central government has taken a discriminatory step is hammering the trade unions. The trade unions were assured by Santosh Kumar Gangwar of the reason behind the revised gratuity.

The trade unions are now in a jolt and are feeling cheated by the government’s decision. Mr Reddy alleges, “The notification is not only a surprise to the Trade Unions/Working Class but is also an example of an anti-employee attitude by the central government and its Labour Ministry.”

Now here the question arises – why were inflation and the wage-increase ignored while deciding the effective date to implement the increased gratuity for employees engaged in private and public sectors? Were these employees not affected by these factors from January 1, 2016 to March 28, 2018? Did these factors only affect the central government employees? Why the discrimination? Why the double standards?

The Haryana State Secretary of the All India Kisan Sabha and trade unionist Dr Balbir Singh explains the reason behind this discrimination, “All the governments use the divide-and-rule policy. The present central government is also using this policy by bifurcating the working class into central government employees and others. In addition to this, the government is also benefitting the private sector owners  by not extending the gratuity enhancement limit to the private sector employees in consonance with central government employees.”

It remains to be seen what step the shorted-out employees will take to get the parity in gratuity. Will they adopt the path of agitation? Will the trade unions sit calm with folded hands? Reddy warns the central government, “There will be widespread protests against this motivated and anti-worker approach, and we shall be a party to such protests so that the authorities can be forced to review the effective date.”

A retired banker, S.C. Bhardwaj, comments, “The central  government is compensating the loss made by Neerav Modi and others by snatching the bread of retired bank employees.”

It is now up to the central government whether it resolves the issue quickly or if it is ready to face the consequences in the forthcoming Lok Sabha election.