Gratuity Rules Change: Now gratuity will be available only after 1 year of service, the government has changed the law.

Rule Change for Gratuity: The government has made a major change to labor laws. According to the new rule, fixed-term employees will now be able to claim gratuity benefits after just one year of service, not just five years.

Gratuity Rules Change: The government announced major changes and reforms to labor laws on Friday. Under this, the Union Labor Ministry has reduced 29 labor laws to just four codes. According to the Labor Ministry, these new codes will guarantee better wages, social security, and health care for all workers in the country (including those in the informal sector, gig workers, migrant laborers, and women). A significant change in the labor law reforms relates to gratuity. Under this, gratuity benefits can now be obtained for even one year of service.

5-Year Time Limit Eliminated

The gratuity rule is particularly important among the reforms being implemented in the Labor Act because, until now, benefits were generally available after completing five years of continuous service in any organization. However, the government has now clarified that fixed-term employees (FTEs) will not have to wait five years and will be eligible for gratuity benefits after just one year of service.

The new rules clarify that fixed-term employees will receive all the benefits associated with permanent employees, including leave, medical and social security. They will be paid the same salary as permanent staff, and will be protected. The government’s aim is to reduce contract work and promote direct hiring.

What is gratuity?

Gratuity is essentially a gift given by a company to its employees in return for their work. Until now, it used to be paid after five years of service, but now it will be paid every year. This proves to be a significant financial support for employees, as they are paid the entire gratuity amount in one lump sum upon leaving the company or retiring. It should be noted that the Payment and Gratuity Act applies to all factories, mines, oil fields, ports, and railways in the country.

It was previously expected that the government would consider reducing the eligibility limit for gratuity from five years to three years. However, in a significant gift to employees, the government has reduced the minimum to just one year.

How to calculate gratuity:

The method for calculating gratuity is very simple, and you can use a formula to calculate your gratuity. To calculate the gratuity fund, the formula (last salary) x (15/26) x (number of years worked at the company) is applied.

Now, suppose you worked for a company for 5 years. Your last pay (Basic Pay + DA) was ₹50,000. The calculation would be (50,000) x (15/26) x (5) = ₹144,230.

Read More: New Labor Codes: Government implemented four new labor codes, changing the rules for wages, gratuity and overtime, Details here

The post Gratuity Rules Change: Now gratuity will be available only after 1 year of service, the government has changed the law. first appeared on informalnewz.

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