When was the last time you switched your job? How long have you been employed in your current organization or was employed in your previous organization? 2/3 years? Well, these are just a few questions that you should ask yourself as last month government raised the existing Gratuity limit from 3.5 Lakhs to whopping 10 Lakhs.
Finally, some relief to employees who have always thought of sticking on with one company for atleast 5 years or more.
Payment of Gratuity Act, 1972 states that on completion of five years service, employees in both private and public sector covered under the Labor Act are entitled to payment of gratuity subject to a maximum of Rs 3.5 lakh. This amount has been raised to Rs. 10 Lakhs with immediate effect. The gratuity amount is calculated as half month’s salary (based on the last drawn salary) multiplied by the number of years in service, needless to say that you have to be employed with this organization for 5 years at a stretch to avail this benefit.
How does this impact you?
Next time you change a job do a reality check for higher basic pay as this would ensure a higher cut for Gratuity payment. Your pay will always go upwards including the basic pay. Having a higher C2C (cost to company) may not necessarily mean a higher basic pay so ensure that you do a though check before accepting the offer. But if you are the job hopper kind who does not believe in sticking to one organization for more than 2 -3 years then make sure you don’t insist on a higher basic pay. As this amount will never come back to you.
Gratuity money is even better than Employee Provident Fund as your fund amount keeps on increasing without you realizing it. As soon as you complete 5 years you are automatically eligible for this large sum of amount. It’s like the employer pays you for your loyalty.
Here I would also like to convey that you should always choose a company to work for with a long term perspective. As you can make out, it pays well. (Changing a job is purely upto you; this is only my personal view).