Employees Can Get Gratuity in 1 Year, Instead Of 5 Years As Part Of Labor Laws

The central government has agreed to change the eligibility criteria for employees to get gratuity. Earlier, an employee had to complete at least 5 years of service in order to get gratuity from a company. This time period has reduced down to only one year. But, not everyone is eligible to get this gratuity. Read on to know!

What is Gratuity?

Before going to eligibility and changes, let’s have a quick look at what is gratuity and what are its benefits.

Gratuity is an amount given by a company to its employee for the services he or she provided. Usually, gratuity is given at the time of retirement, but it can be given in other cases like resignation or sudden death of the employee.

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Changes In Labor Laws

After a recommendation by a high-level Parliamentary Committee on Labour, the central government has agreed to reduce the minimum amount of service required to one year.

The report of the committee quoted a labor secretary saying, “As it is fixed-term employment, it is coming in a big way. We want the workers to get the gratuity also. So one year will be more appropriate.”

Also Read: Explainer: What Are Labour Laws, And Why Are States Changing Them?

Eligibility Criteria:

The catch to notice in the changes is that it is not applied to all types of employees. For now, the government has only made ‘gratuity for one year’ mandatory only for employees who are on a fixed-term contract and their employment period ends when the contract ends.

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However, the committee suggested to the government that all types of employees should be covered, saying, “Such provision be extended to all kinds of employees including contract labours, seasonal workers, piece rate workers and fixed-term employees and daily/monthly wage workers.”

Trade unions are demanding that the government should also include contract laborers, seasonal workers, daily-wage workers, etc.

With the ongoing pandemic, gig economy is also thriving and is expected to rise on steeper curve in the near future. In such case, there are high chances that more voices will rise to make the labor laws to be more inclusive.

This news piece will be updated as soon as the government makes any new changes in the labor laws.

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