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Danendra jain (manager)     02 June 2010

Amendment in Gratuity Act

Now-a-days Engineers and MBAs change the company frequently to get better and better job opportunity and better and better annual package. Attrition rate in most of the private companies is 20% and more. It means every one of five recruited by a company  leaves the job of that  company in one year to join some other company , either due to better offer or due to uncomfortable work in the existing company or the company removes him due to poor performances.

But in all such cases companies save payment under Gratuity Act because minimum service for payment of gratuity to an employee is five years. In all such cases employees are losers and the employers are gainers. As a matter of the fact there are less than 50 out of 100 employees recruited in a particular company are more than five years old.  Advocate should file a PIL or any other case in any court of law  to give relief to such job changers.

Gratuity Act is very old and it needs amendment in the present change scenario. Since the private sector employees are not well organized and particularly job changers have no support of any union or political party this anomaly of the law could not come to light. Since the public sector employees are organized and there are very few cases of leaving of job by an employee in less than five years span of time. As such employers in public sector do not get such gain and the loss to employees in government sector is almost insignificant.

I however request highest officer President of India to look into the matter and guide HRD Minister or Finance Minister or the Law Minister to bring out necessary changes in the Gratuity Act to ensure that gratuity is paid to an employee even if he has served for a month or else it should be made transferable like Provident fund. It is worthwhile to mention here that such job changers face a lot of difficulty in taking back even accumulated contribution towards PF account from many newly developed companies and lastly they discard it. Obviously new brand companies are depriving genuine right of employees and there are hardly a  few people who seek remedy from Indian courts because legal remedy is more costly and time consuming than the amount involved in such sacrifices. However it is also true that Job seekers who are to make their career excellent do not have time and also  cannot afford legal action.



Learning

 6 Replies

V. VASUDEVAN (LEGAL COUNSEL)     02 June 2010

I differ with the views expressed. Gratuity is a form of reward for long-service. In the era of globalization, both the employees and employers has incentives/disincentives in the flexible employment scenario. Attrition leads to more loss in terms of lost time/investment in training etc. and the savings in gratuity could be an incidental benefit. While I don't intend championing the cause of any segment more so of the employers, I see no flaw in the gratuity law, as it stands today.

Vasudevan

R.VENKATASUBRAMANIAN (HGA)     02 June 2010

i am a retired employee of LIC OF INDIA retired on 28-02-2010. lic of india  is a GOVT UNDERTAKINGS comes under the control of  finance ministry(banking & insurance.) kindly clarify that whether i am eligible for the enhanced limit as per the recent amendment in the GRATUITY ACT.

      THANKING YOU

Amardeep Srivastava (Senior Law Officer)     02 June 2010

Dear Mr. Venkatsubramaniam,

The amendment in the act came into force w.e.f. 24/05/2010. Your case does not seem to be covered with the amendment.

Regards,

Danendra jain (manager)     02 June 2010

I agree with your views

SHARAD CHANDRA DANEJ (Asstt. Manager)     05 July 2010

Dear All,

 

Please anyone let me know if pensioners associations, unions, trade unions are fighting for reviewing the effective date of recent amentment in gratuity act from 24.5.2010 to 1.1.06 as done by government for central govt employees. All private sector, banking sector and insurance sector have been given the benefit of enhanced gratuity from 24.5.2010 instead of 01.01.2006 as in case of central govt. employees.

 

S C DANEJ

P. Selvam (Manager - HR)     06 July 2010

Dear Mr. Amarnath Srivastava,

Can u please explain me the recent amnendment on 24/05/2010


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