Central Govt Employees to Get DA Hike, Gratuity, Leave Encashment. Know Calculation

What comes as even more good news for central government employees ahead of the festive seasons, the government has announced that they will get gratuity, cash payments and a hike in their Dearness Allowance (DA). The Department of Expenditure, under the Ministry of Finance, issued an office memorandum on 7 September, 2021, stating the same. The office memorandum said that the retired central employees will receive cash payment and gratuity. The information for gratuity for January 2020 to June 2021 has also been released. The memorandum also mentioned the release of DA from 1 January, 2020, to 30 June, 2021.

Taking to Twitter, the Finance Ministry informed retired employees about the benefits they would receive. It was announced that these benefits would be given to the employees who have retired during the period from January 2020 to June 2021. “Department of Expenditure has issued OM dated 07.09.2021 regarding calculation of Gratuity and Leave Encashment for Central Govt. employees, who retired during the period from January 2020 to June 2021,” Department of Pension & Pensioners’ Welfare tweeted.

This move comes after a series of recent hikes by the Central government to its employees’ and pensioners’ DA and Dearness Relief (DR). The hike by the government saw the DA go up from the previous 17 percent to a robust 28 percent with effect from 1 July. Last year the DA was frozen in place as a result of the COVID-19 outbreak and the ensuing pandemic that had impacted the economy. As a result, the DA was static for the period of January 2020 to June 2021.

The memorandum mentioned the matters relating to the payment of the DA during the period from January 1, 2020, to June 30, 2021. The memo said that the rate of DA for this period would remain the same 17 percent of the basic pay, however, it also stated that the same had been enhanced to 28 percent of basic pay subsuming additional instalments arising on January 1, 2020 (4 percent), July 1, 2020 (3 percent) and January 1, 2021 (4 percent) payable with effect from July 1, 2021.

The Office Memorandum Details

1) As per the existing provisions contained in Central Civil Services (Pension) Rules 1972, DA on the date of retirement or death is reckoned as emoluments for the purpose of calculation of gratuity. Also, as per the existing provisions contained in CCS (Leave) Rules 1972, pay is admissible on the date of retirement plus DA on that are reckoned for the purpose of calculation of cash payment in lieu of leave.

2) In view of the provisions of the aforesaid orders of this Ministry dated 23 April, 2020, and 20 July, 2021, calculation of gratuity and cash payment in lieu of leave-in respect of Central Government employees who retired on or after 01 January, 2020, and up to 30 June, 2021, are required to be made based on the rate of DA at 17 percent of basic pay.

3) Keeping in view that gratuity and cash payment in lieu of leave are one-time retirement benefits admissible to employees on retirement and employees who retired during the period from 01 January, 2020, to 30 June, 2021, have been allowed lesser amount than what would have been calculable but for the aforesaid orders of this Ministry dated 23 April, 2020, and 20 July, 2021, the matter has been considered sympathetically with a view to allowing the same to such employees.

4) Accordingly, the President is pleased to decide that in respect of Central Government employees who retired on or after 01 January, 2020, and up to 30 June, 2021, the amount of DA to be taken into account for the calculation of gratuity and cash payment in lieu of leave will be deemed under; Employees retiring during the period and the Notional Percentage of Dearness Allowance (DA) for calculation purpose will be:

From 01 January, 2020, to 30 June, 2020: 21 percent of basic pay

From 01 July, 2020, to 31 December, 2020: 24 percent of basic pay

From 01 January, 2021, to 30 May, 2021: 28 percent of basic pay

5) All other conditions as stipulated in CCS (Pension) Rules 1972 and the orders of the Department of Pension & PW shall continue to be applicable while calculating gratuity and cash payment in lieu of leave respectively.