7th Pay Commission Latest News 2024: If anyone in your family has a government job, you should know that the government has increased the Dearness Allowance (DA) for central government employees. The government has recently made significant changes to the benefits for central government employees in India. The government of India has announced an increase in the Dearness Allowance (DA) from 46% to 50%, providing employees with additional financial support to cope with the rising costs of daily life requirements. Besides this, there has been a rise in the Gratuity limit for employees. In this article, we will provide you with the details of these changes, highlighting the impact they have on the lives of government workers.
Now, the Dearness Allowance (DA) for central government employees has increased from 46% to 50%. Along with the DA hike, several allowances have also been increased. Additionally, the government has raised the Gratuity for employees.
7th Pay Commission Latest News 2024
According to the orders of the Ministry of Labor and Employment of the Indian government, along with a 50% increase in DA, the maximum limit for retirement and death Gratuity has been increased by 25%. The ministry stated that from January 1, 2024, the maximum limit for retirement and death Gratuity has been increased from the existing 20 lakh rupees to 25 lakh rupees.
What Is Gratuity?
Gratuity is a sum of money that an employer pays to an employee in recognition of their service during their tenure with the company. As per the legal provisions, employees will receive gratuity after completing five consecutive years of service with an organization. Typically, gratuity is disbursed upon the employee’s retirement, although it may also be paid out while the employee is still actively employed.
Gratuity Payment Act 2024
The Gratuity Payment Act was enacted in 1972 to protect the interests of employees. Under this law, employees working in sectors such as mining, factories, oil fields, forest areas, companies, and ports, where 10 or more employees work, are included. Gratuity and provident funds are entirely different. Gratuity is paid in full by the employer, while some part of the provident fund is also contributed by the employee.
Which Organizations Comes Under Gratuity Act?
Any organization where 10 or more employees have worked for one day or more during the past 12 months falls under the ambit of the Gratuity Payment Act. Once an organization falls within the scope of the Act, it remains under its purview indefinitely, even if the number of employees later falls below 10.
Categories Of Gratuity Act
Under the Gratuity Payment Act of 1972, employees are divided into two categories to determine the formula for calculating the gratuity amount they receive.
- The first category includes employees who fall within the scope of this Act,
- The second category includes employees who are outside the Act.
Both private and government sector employees fall under these two categories. Even employers (companies or organizations) who are not covered by the Gratuity Act under the second category can choose to provide gratuity benefits to their employees if they wish.
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How Gratuity Is Calculated?
For Employees in Category 1
The formula used to calculate gratuity is as follows: (15 x last salary x length of service) divided by 26.
Last salary is calculated by adding the basic salary, dearness allowance, and any commission earned (if applicable). In this formula, employees are paid for 15 days on average, considering 26 working days in a month.
For an example:after working for 5 years and 8 months at A Limited, Mr. Sun Job resigns. In his last month, his basic salary was Rs. 13,000. In this scenario, the gratuity calculation will be as follows:
Gratuity amount: Rs. 13,000 x 6 x 15 / 26 = Rs. 45,000.
For Category 2 Employees
Formula for calculating gratuity for Category 2 employees: (15 x previous salary x length of service) divided by 30.
Last salary is calculated by adding the basic salary, dearness allowance, and any commission earned (if applicable). In this formula, employees are paid for 15 days on average, considering 30 working days in a month.
For an example:after working for 5 years and 8 months at B Limited, Mr. Moon Job resigns. In his last month, his basic salary was Rs. 13,000. Since this company is not covered under the Act, Mr. Moon’s gratuity calculation will be as follows:
Gratuity amount: Rs. 13,000 x 5 x 15 / 30 = Rs. 32,500.
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Increment In Other Allowances
Whenever there is an increase in Dearness Allowance, the House Rent Allowance (HRA) also goes up. However, HRA is increased based on the category of cities. The government has also raised the HRA for employees coming under the categories of X, Y, and Z cities.
The Personnel Ministry has ordered that after the DA hike to 50%, the limit for hostel subsidy for children has also increased. There has been a 25% increase in both these allowances. Additionally, the government has revised the Child Care Allowance, which is a special allowance for disabled women. The changes in allowances by the government have come into effect from January 1, 2024.