11 May, 2018
Payment of Gratuity (Amendment) Act, 2018
The Payment of Gratuity Act, 1972 (‘Gratuity Act’) entitles every employee who has completed five years of service (taken as
(i) four years and 240 days for establishments having a six day work week; and
(ii) four years and 190 days for those working less than six days a week), upon cessation of employment, to gratuity calculated at the rate of 15 days wages for each year of completed service or part thereof in excess of six months.
With effect from March 29, 2018, the Ministry of Labour and Employment has:
(i) increased the statutory ceiling for gratuity to ¤ 2 million (approx. US$ 30,000), from the erstwhile ¤ 1 million (approx. US$ 15,000); and
(ii) stipulated 26 weeks as the maximum duration of maternity leave that would be considered as ‘continuous service’ for the purpose of computing gratuity.
Industrial Employment (Standing Orders) Central (Amendment) Rules, 2018
On October 7, 2016, the Central Government amended the Industrial Employment (Standing Orders) Act, 1946 (‘SO Act’) and allied rules, to permit employment on fixed terms in the apparel manufacturing sector.
Pursuant to the Industrial Employment (Standing Orders) Central (Amendment) Rules, 2018 (‘Amendment Rules’) notified by the Ministry of Labour and Employment, effective from March 16, 2018, all sectors covered under the SO Act have now been permitted to employ personnel on ‘fixed terms’.
The Amendment Rules defined a ‘fixed term employment workman’ as ‘a workman who has been engaged on the basis of a written contract of employment for a fixed period’.
However, such a ‘fixed term employment workman’ is eligible for all statutory benefits on a pro-rated basis and his hours of work, wages, allowances and other benefits cannot be less than that of a permanent workman.
4 In certain notified listed equity shares, there is a condition that STT should have been paid at the time of acquisition of such shares as well at the time of transfer so as to be eligible for this regime.
For further information, please contact:
Zia Mody, Partner, AZB & Partners
zia.mody@azbpartners.com
