- Employee unions demand raising gratuity ceiling from Rs 25 lakh to Rs 50-75 lakh
- They propose revising gratuity payout to 1/3 or 1/2 of Basic Pay plus DA per six months
- Calls include removing or increasing the cap of 16.5 times emoluments for gratuity
As anticipation builds around the 8th Pay Commission, employee unions and pensioners' associations are pressing for a major overhaul of gratuity benefits, including a sharp increase in the gratuity ceiling and a revised payout formula aimed at boosting retirement security.
Among the most significant demands is raising the gratuity ceiling from the current Rs 25 lakh to as much as Rs 75 lakh. The representatives of the Indian Railways Technical Supervisors Association demanded a raise in the gratuity ceiling to 50 lakh and calculate gratuity at 1/3 of Basic Pay + DA for every completed six-month period.
Similarly, the Retired and Senior Citizens Welfare Society urged for the periodic revision of the gratuity ceiling, parity across OPS, NPS and UPS, and timely payment at retirement. The NC-JCM Staff Side stressed the increase in the gratuity ceiling to Rs 75 lakh and calculate gratuity based on 25 working days instead of 30.
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Employee representatives argue that the existing limit, fixed under the 7th Pay Commission framework, has been eroded by rising salaries and inflation, reducing the real value of retirement benefits for long-serving government employees.
Stakeholders have also proposed a substantial change in the gratuity calculation method. Under the current system, gratuity is calculated at one-fourth of a month's Basic Pay plus Dearness Allowance (DA) for each completed six-month period of service, subject to a cap of 16.5 times emoluments.
Employee groups now want the formula revised to provide up to half a month's Basic Pay and DA for each completed service period, effectively increasing retirement payouts.
In addition, unions have called for either a significant increase in the existing cap of 16.5 times emoluments or its complete removal, arguing that the ceiling restricts the benefits of employees with longer service tenures and higher pay scales.
The proposals are expected to feature prominently in consultations linked to the 8th Pay Commission, which is likely to recommend revisions to salaries, pensions and retirement benefits for millions of central government employees and pensioners.
Supporters of the changes say a higher gratuity ceiling and enhanced payout formula would help preserve the purchasing power of retirement savings and provide greater financial stability after superannuation.
While the Centre has not indicated whether it will accept the demands, the proposals have intensified expectations of a broader review of retirement benefits under the upcoming pay commission.
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