7th Pay Commission Published : Central govt employees to get up to Rs 7 lakh higher gratuity

7th Pay Commission Published : Central govt employees to get up to Rs 7 lakh higher gratuity

Source : TimesNow.com

Central government workers with retirement in 2021 receive more gratuity and leave cash pay than their senior fellow workers whose service tenure ended in 2020.

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The central government has recently revised the proportion of Dearness Allowance (DA) for the calculation of gratuity and leave cash for Central State workers retired from 1 January 2020 to 30 July 2021.

The breakdown of the additional 11% DA, announced in July, is 4% between January 2020 and June 30 2020, 4% between July and 31 December 2020 and 3% between January and 30 June 2021. In accordance with the rules mentioned in the Central Civil Services (Pension) Rules of 1972, the DA is considered emolument for purposes of calculating gratuity as the date of the retirement or death of the employee.

Based on the rules, the national DA percentage was announced to calculate gratuitousness and leave encashment. The retirement benefits of these staff are calculated according to the Office Memorandum (OM) issued by the Department of Expenditure:

  • For employees retired during January 1, 2020, to June 30, 2020, the applicable DA rate is 21%– 17% plus 4% for the period January 1, 2020 to June 30, 2020.
  • For employees retired during July 1, 2020, to December 31, 2020, the applicable DA rate is 24%– 17% plus 4% for the period January 1, 2020 to June 30, 2020 and 4% for July 1 to December 31, 2020.
  • For employees retired during January 1, 2021, to June 30, 2021, the applicable DA rate is 28%– 17% plus 4% for the period January 1, 2020 to June 30, 2020, 4% for July 1 to December 31, 2020 and 3% for January 1 to June 30 2021.

28% dearness allowance (DA) payment:

As per Tiwari, retired employees will benefit greatly during the period 1 January 2021 to 30 June 2021. Since the calculation of their pension fund is based on the dearness allowance of 28 percent. Those who retired between July and December 2020 will receive less benefit because the DA during that period was 24 percent. Those withdrawing in January-June 2020 will receive the least benefit due to the DA rate of 21%.

For people retiring in 1st January 2020-30 June 2021:

If Basic Salary = Rs 40,000 per month

11% DA Hike in one and a half year = Rs 4,400 per month

Basic + DA = Rs 44,400 per month

Benefit in Gratuity + Leave Encashment = Around Rs 1,16,600

It should be noted that gratuity payment is effective after completion of five years of service, as provided for in the current provisions. This is expected to change under the new labour code, which will allow an employee to receive a gratuitous pay even after 1 year of service.

However, its implementation has been delayed until 1 October and is expected to be delayed until the start of the next financial year. It is also expected that the detailed guidelines and processes will be revised.

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