The Department of Public Enterprises (DPE) has released a consolidated set of guidelines on the payment of gratuity to employees of Central Public Sector Enterprises (CPSEs), bringing together earlier instructions and subsequent clarifications.
The move is aimed at removing ambiguity and ensuring uniform compliance across CPSEs.
The consolidation follows amendments to the Payment of Gratuity Act, 1972, introduced through the Payment of Gratuity (Amendment) Act, 2018. The amendment changed the statutory ceiling on gratuity, replacing the earlier fixed limit of Rs 10 lakh with a provision allowing the Central government to notify the amount from time to time. Acting on this, the Ministry of Labour and Employment notified Rs 20 lakh as the maximum gratuity payable, with effect from 29 March, 2018.
The DPE clarified that for the period between 1 January, 2017 and 28 March, 2018, payment of enhanced gratuity under its earlier guidelines was linked to the financial affordability of individual CPSEs. This applied specifically to executives and non-unionised supervisors on the Industrial Dearness Allowance (IDA) pay pattern whose pay had been revised from 1 January, 2017.
However, from 29 March, 2018 onwards, the position changes significantly. Payment of gratuity up to Rs 20 lakh becomes mandatory for all CPSEs, regardless of their financial condition. This requirement flows directly from the amended Gratuity Act and applies uniformly to all employees across CPSEs.
The DPE has also reiterated that the government’s decision to raise the gratuity ceiling from Rs 10 lakh to Rs 20 lakh based on the recommendations of the Seventh Central Pay Commission, effective 1 January, 2016, does not apply to CPSE employees.
Their entitlement is governed strictly by the provisions of the Gratuity Act and related notifications. Administrative ministries and departments have been asked to circulate these consolidated guidelines to CPSEs under their control and ensure compliance, while keeping the DPE informed of the actions taken.
