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7th Pay Commission: Big update regarding gratuity, benefit will be from 1 to 700000 rupees

7th Pay Commission (CPC) Latest News: Central government employees, who have retired between January 2020 to June 2021, will get more gratuity and leave encashment than their senior colleagues.

7th Pay Commission: There is going to be a big benefit for the people who retired between January 2020 and June 2021. The government has agreed to give the benefit of 11 percent increase in dearness allowance to these retired employees. With this, the employee of junior to senior level will get a benefit of about Rs 1 lakh to 7 lakh in retirement fund. This benefit will be in the form of gratuity and leave encashment.




The breakup of the additional 11% DA announced in July is 4% for January 2020 to June 30, 2020, 4% for July to December 31, 2020 and 3% for January to June 30, 2021. As per the rules mentioned in the Central Civil Services (Pension) Rules, 1972, DA on the date of retirement or death of the employee is reckoned as emoluments for the purpose of computing gratuity.

National percentage of DA has been declared for calculation of gratuity and leave encashment as per rules. As per the Office Memorandum (OM) issued by the Department of Expenditure, the retirement benefits of these employees will be calculated as follows:-

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

According to the Jagran report, HS Tiwari, former president of AG Office Brotherhood, Prayagraj, which calculates DA, said that at the time of retirement if the basic salary of an employee is Rs 40,000, then he will get 11 percent increase in Dearness Allowance (DA). His gratuity and leave encashment amount will increase by about Rs 1,17,000. On the other hand, if the basic salary is Rs 2,50,000 per month, then the retirement fund will increase by more than Rs 7 lakh.




28% Dearness Allowance (DA) payment

According to Tiwari, the employees who retired between January 1, 2021 and June 30, 2021 will benefit greatly. Because his retirement fund will be calculated on the basis of 28 per cent dearness allowance. Those who have retired in the July-December 2020 period will get less benefit, as the DA was 24 per cent during that period. Those retiring in January-June 2020 will get the lowest benefit due to the 21 per cent DA rate.

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

  • 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
  • Gain in gratuity + Leave encashment = around Rs 1,16,600

It may be noted that as per the existing provisions, the gratuity payment is effective after the completion of 5 years of service. This is expected to change under the new labor code, wherein the employee will be eligible for gratuity payment even after completing 1 year of service.

However, the implementation of the same has been postponed till October 1 and is expected to be delayed till the beginning of the next financial year. Detailed guidelines and procedures are also expected to be revised for this.

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