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5-year Criteria of Gratuity Should Be Reduced to One, Parliamentary Committee Suggests

Image for representation (PTI)

Image for representation (PTI)

The recommendations were part of the report on the Code of Social Security, 2019, which was submitted to the Lok Sabha Speaker, Om Birla on July 31.

A parliamentary Standing Committee has recommended that the existing regulation of the five-year period of continuous service for gratuity payment, should be reduced to one year.

The suggestion was made amid widescale layoffs due to economic disruptions during the coronavirus pandemic. A Money Control report stated, it was also pointed out that the five-year employment period provision also incentivises employers to terminate employees before the completion of the period.

The committee was chaired by Biju Janata Dal MP Bhartruhari Mahtab, who highlighted that the country's labour market trend must be kept in mind as most people are employed for short durations. As a result, most employees are unable to avail gratuity benefits due to the five-year continuous employment criteria.

The recommendations were part of the report on the Code of Social Security, 2019, which was submitted to the Lok Sabha Speaker, Om Birla on July 31.

Another significant recommendation by the panel was that gratuity should be payable to all employees, this includes-- contract labourers, seasonal workers, piece-rate workers, daily/monthly wage workers.

"The benefit of the pro-rata gratuity should be extended to the contract labour if they serve for the full period of the contract irrespective of the change of contractors. The principal employer should be liable to pay pro-rata gratuity for the term of the contract and it may be paid along with the last wages," the report noted.

The Committee further added that the formula for calculation of gratuity payable should be given in the code itself, instead of resorting to notifications at a later stage.

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