This hike in gratuity was on account of revision of dearness allowance payable to central government employees to 50% of the basic pay with effect from January 1, 2024.
In a setback for government and organised sector employees, the Employees’ Provident Fund Organisation (EPFO) has decided to keep in “abeyance” the hike in retirement and death gratuity for employees.
To recall, the EPFO in an order issued last month said that the maximum limit of retirement gratuity and death gratuity was hiked by 25% from Rs 20 lakh to Rs 25 lakh. This hike in gratuity was on account of revision in dearness allowance payable to central government employees to 50% of the basic pay with effect from January 1, 2024.
A week later on May 7, the retirement fund body issued another circular announcing that the enhancement of gratuity on account of increase in DA has been kept in abeyance with immediate effect. The order has not mentioned any reasons for the decision.
This circular has been signed by S K Suman, additional Central PF commissioner. “The circular number HRD-1/8/2024/Misc-Circulars-Part(1)/1004 dated 30.4.2024 is kept in abeyance with immediate effect,” it reads.
It is important to recall that the central government had in March hiked the DA to 50% from 46% for nearly 50 lakh employees and more than 67 lakh pensioners, effective January 1 this year.
With DA hike to 50%, all other related allowances such as HRA, gratuity, children education allowance (CEA) and hostel subsidy increased automatically.
After receiving several queries from various quarters about this increase in rate of allowances, the Ministry of Personnel, Public Grievances and Pension Department of Personnel and Training has issued a clarification to clear all doubts in this regard.
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“References are being received from various quarters with regard to the amount of children education allowance and hostel subsidy admissible consequent upon enhancement of dearness allowance payable to central government employees @ 50% w.e.f. 1st January, 2024,” the department said in an office memorandum issued on April 25.
Clarifying the rule, the DoPT said the limits of children education allowance and hostel subsidy “would be automatically raised by 25% every time the dearness allowance on the revised pay structure goes up by 50%”.
As per the rules, the gratuity limit and other allowances automatically get revised whenever the DA hits a ceiling of 50%. With the DA hike, it was also speculated that following this revision, the DA would be merged with Basic Pay since it has reached 50%. However, the government has denied any such proposal for now.
