As shorter employement tenures are increasingly becoming the norm, Government is likely to consider lowering the five- year minimum eligibility condition for gratuity payments.
According to a report published in livemint.com, there has been a rise in the demand to lower the gratuity eligibility criteria than the exiting five years of continuous employment. Quoting the officials, the report added that discussion will be held on easing the gratuity eligibility criteria and keeping it between one and three years.
The growing trend of contractual employment and declining job security are two major reasons behind the demand to lower the threshold for gratuity payments, according to the sources who spoke to the publication.
Until it has not been finalized on the reduction of threshold period, the norms for the gratuity payment will be eased, said official. One of the two officials who spoke to livemint.com said that a parliamentary standing committee on labor has also suggested the same.
Labour market expert are of opinion that the five-year gratuity period threshold is outdated and is not feasible in terms of keeping the interest of employees. Besides, some trade unions have highlighted that many firms fire workers before they become eligible for gratuity payments to save costs.
Many experts also realized that the gratuity payment threshold should be reduced to 2-3 years. It should be noted that under the payment of Gratuity Act 1972, the gratuity is a lump sum amount that is paid by employer to employees for their services during the course of employment tenure.
An employee is eligible to claim gratuity at the time of retirement or upon completing a minimum five years of employment in a company.
While two government officials told the publication that the move is being considered, the spokesperson of labor ministry said that no such official confirmation is yet.
