after 29.03.2018 as per the Presidential directive and amendment in subSection (3) of Section 4 of 1972 Act whereby ceiling was enhanced to Rs.20 lacs. By O.M. dated 10.07.2018, DPE has clarified that it is not mandatory to pay enhanced gratuity before the cut-off date of 29.03.2018 and for the period between 01.01.2017 to 28.03.2018, concerned CPSEs are empowered to pay gratuity with enhanced ceiling subject to their ‘affordability’ in terms of DPE O.M. dated 03.08.2017. It is further argued that implementation of pay revision which includes enhanced gratuity is subject to ‘affordability’ as defined under Clause 3 of O.M. dated 03.08.2017, which provides that pay revision will be implemented only if additional financial impact in the year of implementing the revised pay package does not go beyond 20% of average Profit before Tax (PBT) of last 3 Financial Years, preceding the year of implementation. If the concerned CPSE does not have the required affordability, pay revision need not be implemented at all. However, an exception to the above rule has been carved out in Clause 3 itself regarding the ‘Fitment Benefit’ to the effect that even if the concerned CPSE is not in a position to afford, Fitment Benefit would be provided unless the additional financial impact goes beyond 40% of average PBT of last 3 Financial Years. Thus, the discretion to examine the affordability, according to Mr. Hegde, learned Senior Counsel is inherent in the amendment to the Act.
