The Union Cabinet decided to raise the ceiling of gratuity payable to employees in the private sector from Rs. 3.5 lakh to Rs. 10 lakh.
The decision will bring the private sector employees at par with the government employees in terms of gratuity benefits. The decision follows the Sixth Pay Commission recommendation that has raised the limit for Central Government employees.
Labour and Employment Minister Mallikarjun Kharge held a number of consultations with stakeholders to arrive at a consensus on the issue.
Gratuity is covered under the Payment of Gratuity Act, 1972, which applies to factories and other establishments employing 10 or more persons.
The employees are entitled to gratuity on completion of 10 years in service at the rate of 15-day wages for each year of service or part of it in excess of six months subject to a maximum of Rs 3.5 lakh.
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