Government Tweaks Gratuity Rules: These Employees to Gain More

The central government has clarified the gratuity rules under the NPS. This order states that a second gratuity won't be available upon re-employment, but there are conditional benefits for employees coming from PSUs or state government jobs. 

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A guarantee of post-retirement security

For central government employees, gratuity isn't just a word; it's a guarantee of post-retirement security. But what if you've worked in two different government institutions? Will you get gratuity twice, or will the government deduct money for the second term? To clear up this confusion, the central government's Department of Pension & Pensioners' Welfare has issued an important clarification. This new order, issued for employees under the National Pension System (NPS), clarifies when your gratuity will be limited and when you'll get the full benefit.

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What will be its impact on re-employment?

In its memorandum, the government has cited Rule 4A of the CCS (Payment of Gratuity under NPS) Amendment Rules, 2025. Simply put, this rule prevents double benefits. The department has clarified that if a government employee retires and has already received their gratuity, they will not be given a separate gratuity for their second term after re-employment. This means that once retirement gratuity is received from the government treasury, they cannot claim it again after being re-employed in the same system.

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The news is somewhat of a relief for employees

For those coming from a public sector undertaking or a state government, the math is understandable. This order has slightly different rules for employees who joined the central government service after getting proper permission from a PSU or an autonomous body. The news is somewhat of a relief for such employees, but with a condition.

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The government has imposed a limit on it

If you've come from a PSU, you have the right to retain your gratuity and will also receive gratuity for your service with the central government. However, the government has imposed a limit on this. According to the rules, the total gratuity received from both sources cannot be more than what an employee would have received if they had served their entire tenure (PSU + central government) continuously in the central government. The same formula applies to those who leave a state government job to join the central government. Overall, the money will come from two pockets, but the total limit will be based on your final salary and total service period.

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Good news for military personnel: No 'limit' will be imposed

The biggest relief in this whole matter is for our ex-servicemen. The government had many questions about what would happen to those who join the civil service after their military service. After consulting with the Department of Expenditure, the government has clarified that this 'gratuity limit' rule will not apply to ex-servicemen.

This means that if someone has worked in the military and received gratuity, they will receive the full civil service gratuity after joining the civil service. Not a single rupee will be deducted from their civil service gratuity because of the gratuity received from the army.