Gratuity Now Payable After Just One Year

Aman

1 week ago

Big Win for Contract Workers: Gratuity Now Comes After Just One Year!

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Imagine working hard on a project for a company, knowing your job will end in a few months. Earlier, you got nothing extra when you left. But from November 21, 2025, everything has changed. The Indian government has switched on four new labour codes. The biggest news? Fixed-term employees now get gratuity after just one year instead of five. Millions of Indians just got a better safety net overnight.

What Exactly Changed on Gratuity?

The old rule was simple but tough. You needed five full years in the same company to get gratuity, even if you were on a fixed-term contract. Now the government says one year is enough. So, if you join a company on a two-year contract, you walk away with gratuity money when the contract ends. Moreover, your pay, leave, medical benefits, and social security will match what permanent staff get. No more second-class treatment.

Who Gains the Most?

Almost everyone feels the difference.

Fixed-term and contract workers now enjoy the same perks as regular employees.
Gig and delivery workers finally have an official name in law books. Companies like Swiggy or Uber will pay 1–2% of their turnover into a social security fund for them.
Women can now work night shifts and even in mines if they agree and safety rules are followed. Equal pay for equal work is now written into law.
Every single worker, from a small shop to a big factory, will get a national minimum wage. No sector is left out.
Even if a factory has just one person doing dangerous work, government health insurance (ESIC) becomes compulsory.

Mandatory Health Check-ups and Appointment Letters

Here’s something new and caring. Workers above 40 years must get a free full-body check-up every year, paid by the employer. Also, no one can start work without a proper written appointment letter. This small paper will mention salary, working hours, leave rules, and job duration. Many people never got this before. Now it’s the law.

How Much Gratuity Will You Actually Get?

The formula stays the same and is easy. Employers calculate it like this:

Gratuity = Last drawn basic pay + DA × 15 ÷ 26 × Number of years served

For example, if your last basic + DA is ₹50,000 and you worked 2 years, you get roughly ₹57,692 as gratuity. Even one completed year counts fully.

Why Did the Government Do This?

The old 29 laws were born before or just after Independence. They confused companies and left workers unprotected. The new four codes clean up the mess. Companies find it easier to follow rules. At the same time, workers gain stronger rights. The government hopes companies will now hire more people directly instead of through endless contractors.

Other Changes You Should Know

Salaries in IT companies must reach bank accounts by the 7th of every month.
Overtime pay is now double in most places.
Safety committees are compulsory in big workplaces.
Women members must sit on every grievance committee.
Transgender workers get the same protection as everyone else.
Journalists, stunt artists, dubbing artists, and digital media workers are now fully covered.

Labour Minister Mansukh Mandaviya said these codes open more jobs for women and treat everyone equally. Experts like Puneet Gupta from EY call this the biggest labour reform in decades. Workers feel safer. Companies get simpler rules. Everyone wins.

What Happens Next?

Most rules started on November 21, 2025. Some states may take a few extra weeks to update their systems, but the central rules are already active. If your company still follows old habits, you can now point to the new law.

For the first time, India’s labour laws look modern, fair, and friendly to both workers and companies. A one-year gratuity rule is just the beginning of a much bigger safety net.

FAQs

I am on a six-month contract. Do I get gratuity?
No. You need to complete at least one full year of continuous service.
Is the one-year gratuity rule only for big companies?
No. It applies to every company covered under the Payment of Gratuity Act—factories, shops, mines, and most offices.
Will my gratuity be less because I worked only one or two years?
Yes, it will be smaller than someone who worked longer, but you still get it. The formula uses your exact years of service.
Do gig workers like delivery boys get gratuity now?
Not directly. Their companies will put money into a social security fund instead. The government will decide later how to use that money.
Can a company still fire me easily?
Bigger companies now have slightly clearer rules for hiring and firing, but fixed-term workers always leave when the contract ends.
What if my employer refuses to give an appointment letter?
It is now illegal. You can complain to the labour inspector or use the online portal. Penalties are heavy.

That’s the new world of work in India—fairer, clearer, and finally catching up with the 21st century!