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Gratuity Eligibility Reduced to 1 Year: End of 5-Year Wait, Who Benefits?

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Gratuity in 1 Year: New Rule Benefits Fixed-Term, Contract Workers from Nov 2025

अब 1 साल में मिलेगा ग्रेच्युटी बेनिफिट

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News18•03-04-2026, 22:14

Gratuity in 1 Year: New Rule Benefits Fixed-Term, Contract Workers from Nov 2025

•Government changes Gratuity rules: now eligible after just 1 year of service, down from 5 years.
•New rule effective from November 21, 2025, under new Labour Codes.
•Applies to employees joining after November 21, 2025; old rules apply to those who joined earlier.
•Fixed-Term Employees and Contract Workers will benefit from the 1-year rule; permanent employees generally still need 5 years.
•Gratuity calculation now includes Basic Salary, DA, and Retaining Allowance, potentially increasing payouts by 66%.

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New Gratuity Rule: 1 Year Service Now Qualifies for Gratuity, Benefits Private Sector

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Job Rule Change: Full and Final Settlement in 48 Hours from April 1, 2026!

What are the key components of FnF?- Final Salary: It includes payment for the last working month, calculated on a pro-rata basis depending on the number of days worked. It may also cover additional allowances such as house rent allowance (HRA) or special allowances. - Leave Encashment: Employees are compensated for unused Earned Leave (EL) or Privilege Leave (PL), typically calculated based on their latest basic salary and leave balance. -Bonus and Incentives: Any performance-linked incentives, commission, or statutory bonuses applicable for the period worked must be included in the settlement. -Gratuity: The new framework allows gratuity eligibility after just one year in certain cases. The new framework also mandates that gratuity be paid within 30 days of an employee’s qualification and exit, ensuring timely access to this benefit.- Reimbursements: Any approved business expenses incurred by the employee, such as travel, accommodation, or official purchases, must be reimbursed.- Deductions: Employers may deduct amounts related to taxes, salary advances, company loans, notice period shortfalls, or unreturned assets, as per company policy and legal provisions.

New Labour Codes: Get Your Full & Final Settlement in 2 Days by 2026!

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Representational image (Image: News18)

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