Act No. 12 of 2018

Payment of Gratuity (Amendment) Act, 2018

The 2018 amendment changed the Payment of Gratuity Act, 1972 by enabling the Central Government to notify the gratuity ceiling and the maternity-leave period counted for continuous service. The amendment came into force on 29 March 2018.

Current legal position: With effect from 21 November 2025, gratuity is governed by Chapter V of the Code on Social Security, 2020. The Code repealed the Payment of Gratuity Act, 1972 subject to its savings provisions. The Social Security (Central) Rules, 2026 were notified on 8 May 2026. This page therefore preserves the 2018 amendment as an important historical statutory text while identifying the law now governing gratuity.

What the 2018 Amendment Changed

Provision 2018 change
Section 2(k) Recast the definition of "notification" as a notification published in the Official Gazette.
Section 2A(2), Explanation (iv) Replaced the fixed reference to twelve weeks of maternity leave with a period that could be notified by the Central Government from time to time.
Section 4(3) Replaced the fixed ₹10 lakh ceiling with an amount that could be notified by the Central Government from time to time.

Notifications Issued on 29 March 2018

The Central Government brought the Amendment Act into force on 29 March 2018. On the same date, it notified a gratuity ceiling of ₹20 lakh and specified twenty-six weeks as the maternity-leave period for the relevant continuous-service provision.

Present-day note: these 2018 notifications arose under the former Payment of Gratuity Act, 1972. Their continuing effect is subject to the repeal-and-savings mechanism in section 164 of the Code on Social Security, 2020 and any later notification made under the Code.

Text of the Payment of Gratuity (Amendment) Act, 2018

THE PAYMENT OF GRATUITY (AMENDMENT) ACT, 2018
NO. 12 OF 2018

[28th March, 2018]

An Act further to amend the Payment of Gratuity Act, 1972.

BE it enacted by Parliament in the Sixty-ninth Year of the Republic of India as follows:-

1. Short title and commencement

(1) This Act may be called the Payment of Gratuity (Amendment) Act, 2018.

(2) It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint.

2. Amendment of section 2

In the Payment of Gratuity Act, 1972 (hereinafter referred to as the principal Act), in section 2, for clause (k), the following clause shall be substituted, namely:-

"(k) "notification" means a notification published in the Official Gazette and the expression "notified" shall be construed accordingly;".

3. Amendment of section 2A

In section 2A of the principal Act, in sub-section (2), in the Explanation, in clause (iv), for the words "twelve weeks", the words "such period as may be notified by the Central Government from time to time" shall be substituted.

4. Amendment of section 4

In section 4 of the principal Act, in sub-section (3), for the words "ten lakh rupees", the words "such amount as may be notified by the Central Government from time to time" shall be substituted.

Gratuity Law After 21 November 2025

Chapter V of the Code on Social Security, 2020 now contains the central statutory provisions on gratuity. Among other matters, section 53 deals with payment of gratuity, while the Code"s unified definition of "wages" is relevant to calculation. The Ministry of Labour and Employment has also clarified that gratuity calculations under the Labour Codes apply from 21 November 2025.

For fixed-term employees directly engaged by an employer, the Ministry"s 2026 FAQs state that gratuity eligibility arises on completion of one year of service under the contract. The detailed central procedural framework is now contained in the Social Security (Central) Rules, 2026.

This page is intended as a statutory reference and general legal-information resource. Because gratuity entitlement can depend on the nature of employment, establishment coverage, length and continuity of service, wage structure, termination event, applicable government, exemptions, awards, settlements and contractual terms, the governing provisions and notifications should be checked for the particular case.