As per New labour Code, now fixed-term employees in various sectors are now eligible for gratuity after just one year of employment, instead of needing to complete five years.
The Union government announced this significant change as part of a major update to India’s labor laws. The government has combined 29 existing labor laws into four simpler labor codes.
Fixed-term employees get gratuity after 1 year of service: New labour Code
The Union Labour Ministry said that the restructuring aims to ensure better pay, broader social security, and improved health protections for workers in different sectors.
A fixed-term employee someone hired under a contract with a set end date or that ends once a specific task or project completed. The reforms also apply to informal workers, gig and platform workers, migrant laborers, and women employees.
One of the most important announcements in this update relates to gratuity entitlement, a change that could affect millions of employees.
The 5 year limit gone
Previously, under the Payment of Gratuity Act, fixed-term employees qualified for gratuity only after five years of continuous service in a workplace. With the New labour Code in effect, this time requirement relaxed for Fixed Term Employees (FTEs).
These employees will now be eligible for gratuity after just one year of service. The ministry explained that this change aims to put fixed-term workers on the same level as permanent employees.
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