New Labour Laws: Employees to get Gratuity after 1 Year of Service Instead of 5, Check Eligibility

Employees working for a full time job receive gratuity benefits. If an employee continues to work for 5 years, then the person receives the deducted amount through the cuts from the cost to the company over those years, collectively, after he or she resigns. But as per the new labour laws, employees can benefit from a 1 year gratuity, but not all. The fixed term employees get this benefit.

In a significant reform of India’s labor system announced by the Union government on Friday, all fixed term workers will now be eligible for gratuity after just one year of service at an organization, regardless of industry, rather than five years.

Also Read

How to Submit Digital Life Certificate Using Aadhaar? Know Easy Steps

The restructuring is intended to enhance workers’ wages, extend their social security coverage and increase their health related protections across industries, according to the Union Labor Ministry. In addition, the government has expanded the definition of wages to include more pay components, increasing the transparency of the calculation. Moreover, the revised regulations of the Payment of Gratuity Act, 1972, will now take gratuity into account when calculating salaries.

The revised regulations will give fixed term workers the same salary structure, leave options, healthcare benefits and social security protections as permanent employees. These modifications are intended by the government to lessen firms’ overreliance on contract personnel and promote a more open and direct recruitment process.

Who are fixed term employees?

A fixed term contract allows an employer to hire an employee for a particular, specified duration or assignment. The agreement has a fixed expiration date. Unlike people with permanent jobs, those with fixed term contracts have an automatic expiration date. These agreements are commonly used to complete projects on a defined timeline or to satisfy short term staffing needs. If changes are not made to the contract, fixed term workers should review it and speak with HR.