Gratuity Rule Change: A significant change has been implemented for employees in India. For a long time, to receive gratuity, employees were required to work continuously for at least five years with the same company, preventing millions of employees from receiving this benefit. However, with the implementation of the new labor code, this rule has been changed. Now, even employees completing just one year of service will be eligible for gratuity. This change is crucial for young people who change jobs, contract staff, and gig workers, as they no longer have to wait years for their rights.
What Changes in the New Labor Code
The government has repealed 29 old labor laws and implemented four new labor codes, covering wages, social security, industrial relations, and occupational safety. These new rules aim to bring more employees under the ambit of social security. Gratuity has also been significantly expanded. Previously, this facility was limited to permanent employees, but now it will be available to fixed-term, contract-based employees, gig workers, platform workers, and migrant labor. This change will directly benefit millions of people whose jobs are not permanent.
Gratuity in One Year
Previously, gratuity benefits were only available to those who had worked continuously for five years with the same employer. However, the new rules remove this requirement. If an employee leaves a job, changes companies, or completes a contract after working for even one year, they will also receive gratuity. This change is especially beneficial for young people who frequently change jobs in search of better opportunities.
Gratuity for One Year of Service
The process for calculating gratuity remains the same. The last basic salary is multiplied by a factor of 15/26 and then multiplied by the total number of years of service. If an employee’s last basic salary is ₹50,000 and they have worked for only one year, the gratuity amount is approximately ₹28,847. While this amount may seem small, it can prove financially beneficial for regular job changers and contract employees.
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The Importance of Gratuity
Gratuity is provided as financial assistance. It is also seen as a recognition of an employee’s service. With the implementation of the new rules, this benefit has expanded significantly. This rule will act as a safety net for employees who lack job stability. Women, migrant workers, and gig workers, who often lack financial security, will now be able to become more self-reliant by being covered by gratuity.