A major announcement made by the government aims to make drastic changes to regulations on gratuities, which will have an impact on many thousands of employees throughout the nation. From now from now, some workers could not be eligible to receive benefit payments for gratuities in the wake of this new policy and this could cause the fear of those who are close to retirement.
What’s New?
The new notice the new notification states that employees who fail to meet the requirements for continuous service are not eligible to receive gratuities. Gratuity can be granted in accordance with the Payment of Gratuity Act, 1972 to those who have completed a minimum five years of continuous employment within the establishment. But, due to the modifications implemented in opposition the definition of continuous service was slightly more stricken.
Based on the latest definition, unapproved extended leave or repeated short-term resignations informal assignments that do not have formal renewals, or certain kinds of work that are part-time are, thus, ineligible employees from claiming gratuity benefits.
Who Would Be Affected?
- Contract Workers: Employers on contract for short periods that do not include renewal provisions cannot be eligible for gratuity in the event of a in writing that the contract is renewed that is not accompanied by a significant absence.
- Part-time employees: Employees working on irregular schedules or on days could never meet the condition of continuous service that is required for minimum time.
- Employees who are on frequent breaks Employees who have quit and re-joined within the past five years but have not maintained continuation of their service can be denied the gratuity.
- Employees who are terminated for disciplinary reasons Employees who are terminated due to infractions to a firm policy can not be granted gratuity.
Why The Change?
This change, according to the view of the government, was conceived to stop fraud with gratuities as well as making sure that it’s only genuine long-standing employees that benefit from this scheme. According to the officials, gratuities are a way to reward loyalty and long-term service, certainly not for temporary or irregular work.
What Should Employees Do?
The experts advise employees to
- Check regularly their employment status as well as their contract.
- Make sure that you have continuous service with no interruptions.
- Documents on renewals or extensions to their contracts.
- Get clarification on how to qualify for gratuities in HR department. HR department in the event in doubt.
If they fail to comply with the new rules and regulations, they could be at risk losing an enticing retirement payout, typically, a few lakhs.
Conclusion
The reason for the change in the gratuity rules was an exhilarating wake-up request for workers to check their work history and the conditions regularly. It may sound somewhat rude, however keeping up-to-date and vigilant can help prevent any mistakes when it comes to the retirement funds that are deserving.
