The upcoming Gratuity Rule Change under India’s new labour codes is set to significantly reshape workplace benefits for employees across sectors. As implementation of the new labour code 2025 approaches, workers, HR teams and employers are closely examining how Gratuity Calculation and payment eligibility will change. The revisions may offer broader coverage, benefit non-traditional workers and strengthen financial security for millions.
New Rules to Reshape HR Policies & Pay Structures
The new labour laws are expected to bring major adjustments in wage definitions, contract hiring patterns, and HR documentation. With the inclusion of a unified “wages” definition, many employees may see changes in basic salary, allowances and statutory deductions. For employers, these rules will influence how gratuity liabilities are calculated and how employee benefits are managed. Companies may need to:
- Revise employment contracts to match the new wage structure
- Adjust payroll systems for accurate Gratuity Calculation
- Include gig workers and fixed-term employees under benefit policies
- Reassess long-term costs linked to gratuity new rules
For employees, especially those in contract roles or modern digital platforms, the new laws bring broader inclusion and clearer guidelines.
What Is Gratuity?
Gratuity is a lump-sum financial benefit given by an employer to an employee as a token of appreciation for continuous service. It acts as a retirement or exit benefit and is commonly paid when an employee leaves the organization after completing the required minimum service period. Under traditional rules, gratuity encourages long-term service and ensures financial stability for workers after employment ends.
Which Employees Will Get Gratuity?
Under existing laws, employees typically become eligible for gratuity after completing five years of continuous service. However, under the new labour laws gratuity structure, eligibility may extend to:
- Fixed-term employees – Eligible even if they serve less than five years
- Gig workers – Expected to be included under certain benefit frameworks
- Platform workers – May get partial or structured support under social security code
- Seasonal workers – Will receive gratuity based on days worked
- Full-time salaried employees – Continue to be eligible under revised conditions
This expansion ensures that workers contributing to the modern economy—beyond traditional full-time roles—also receive financial safety.
What Is the Formula for Gratuity?
The standard formula for Gratuity Calculation remains:
Gratuity = (15 × Last Drawn Basic Salary × Completed Years of Service) / 26
Under the new labour laws, the amount could rise for many employees because the new wage definition increases the share of basic salary in total pay. A higher basic salary means a higher gratuity payout.
For seasonal or gig workers, separate formulas may apply depending on the sector and total working days.
Key Details
- New labour code 2025 may widen gratuity eligibility
- Fixed-term workers may receive gratuity even before 5 years
- Wage definition changes will affect Gratuity Calculation
- Gig workers and remote workers may be included in new frameworks
- Employers must update HR systems to comply with gratuity new rules
Disclaimer
This article provides a simplified explanation of expected changes under the upcoming new labour codes. Final rules may differ once government notifications are issued. Employees should refer to official government releases or consult HR for precise eligibility and calculation details.
FAQs
Q1. Will gratuity be available after one year under the new labour laws?
Yes. Fixed-term employees may receive gratuity based on contract duration, even if they have not completed five years. Final implementation will depend on government notifications.
Q2. How will the new salary structure affect gratuity?
With the new wage definition increasing the basic salary percentage, gratuity payouts may rise for many employees under the new labour laws gratuity.
Q3. Are gig workers included under the new gratuity rules?
Gig and platform workers may receive certain protections and benefits under the revised social security code, though exact gratuity structure may vary by category.
