Providing up to Rs 20 lakh gratuity mandatory for all CPSEs from this date: Finance Ministry clarifies rules

The Department of Public Enterprises (DPE) has brought clarity to some issues that have long been a point of confusion for employees of Central Public Sector Enterprises (CPSE). The department, which comes under the Ministry of Finance, has consolidated its earlier guidelines to bring clarity to many gratuity-related issues for CPSE employees. One of the key clarifications is that on and after March 29, 2018, the payment of Rs 20 lakh gratuity is mandatory for all CPSEs irrespective of their affordability.

Let’s see what are the other clarifications DPE has provided to CPSE employees regarding their gratuity amount.
Rs 10 lakh gratuity ceiling substituted



DPE says the Payment of Gratuity Act, 1972, was amended vide the Payment of Gratuity (Amendment) Act, 2018 (No. 12 of 2018), notification dated March 29, 2018, which substituted the word Rs 10 lakh.

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“The amendment substituted the words ‘ten lakh rupees’ with the words ‘such amount as may be notified by the Central Government from time to time’,” says the DPE office memorandum

Maximum gratuity to CPSE employees is Rs 20 lakh

DPE says the Ministry of Labour & Employment vide Notification No. S.O. 1420(E) dated March 29, 2018 had notified that the Central Government hereby specifies that the amount of gratuity payable to a CPSE employee under the Act shall not exceed Rs 20 lakh.

Condition when paying up to Rs 20 lakh gratuity is not mandatory for CPSEs

DPE says the payment of gratuity under DPE guidelines dated August 3, 2017, is subject to affordability of the CPSES concerned effective for the period from January 1, 2017 till March 28, 2018, in respect of executives and non-unionised supervisors of CPSEs on IDA pay pattern, where, pay has been revised w.e.f. January 1, 2017.

Conditions when paying up to Rs 20 lakh gratuity is mandatory for CPSEs

DPE clarifies on and after March 29, 2018, the payment of gratuity of Rs 20 lakhs is mandatory for all the CPSEs irrespective of their affordability as it is a statutory provision in light of the amendment in the Payment of Gratuity Act, 1972. This provision is applicable to all employees of all CPSEs, says the DPE memorandum.

Rs 20 lakh gratuity ceiling is not necessary for CPSE employees

DPE further clarifies the government's decision on the basis of the recommendations of the 7th Central Pay Commission (CPC) regarding raising the gratuity ceiling from Rs 10 lakh to Rs 20 lakh w.e.f. January 1, 2016, is not applicable to the employees of CPSEs.