Early gratuity after 1 year - check beneficiaries, new labour code rules, when are they applicable

The Indian government released four labour codes on 21 November, rationalising 29 existing labour laws into 4 codes.

Amid several path-breaking changes announced in these labour reforms, one of the commendable change is the provision of early gratuity wherein employees will be entitled to it only after one year of service.

Here we give a lowdown on this.

What is the change around entitlement for gratuity in labour codes?

Currently, gratuity is given only after 5 years of continuous service, whereas now workers will become eligible for it just after one year of continuous service.

Will all employees be eligible for gratuity after one year of service?

This entitlement (after one year of service) will come into force only in case of fixed-term employment.

Aside from gratuity, what other key changes are being rolled out under fixed-term employment?

Among several benefits mentioned for fixed term employment (FTE), the new labour codes highlight that this will promote formalisation in job market and reduce informal employment. FTE guarantees workers to receive leave benefits, regulated working hours and medical benefits.

The codes also point out that FTE will lead to the migration of contractual employment into the permanent employment structure and not the conversion of permanent jobs into FTE.

Is there any change in wages for workers under fixed term employment vis-a-vis permanent employees?

There will not be any change. Workers will receive the same wages equal to permanent employees, which can be higher than minimum wages. This will raise their income opportunities and expand social security benefits.

The codes also mention that FTE workers will receive benefits equivalent to permanent staff.

What social security benefits will be offered to contractual workers?

Labour reforms also mention that the principal employer will provide health benefits and social security benefits to contract workers.

Additionally, workers will get annual health check-up for free in order to promote preventive healthcare.

What other category of employees are being covered under these labour reforms?

Aside from fixed term employees, other categories which are dealt separately include gig workers, contract workers, women workers, youth workers, MSME workers, beedi& cigar workers, plantation workers, digital media workers, mine workers, hazardous industry workers, textile workers, IT workers, dock workers and export sector workers.

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