Millions of employees rely on gratuity as a key financial support. Traditionally, companies paid gratuity to staff who served for at least five years. However, the new labour codes have changed this rule, making it easier for employees to benefit, even with shorter tenures.
What’s Changed?Under the revised labour regulations, employees are now eligible for gratuity after just one year of service. This is especially beneficial for young professionals or those who frequently switch jobs for better opportunities. Even if an employee leaves the company early, they are entitled to receive gratuity, ensuring greater financial security.
How Gratuity Will Be CalculatedThe gratuity amount is based on:
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Basic Salary: The employee’s core monthly wage
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Years of Service: Total number of years worked
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Calculation Formula: The amount is derived using a fixed ratio of 15/26 or as per company norms
Example:
An employee with a basic salary of ₹20,000 who worked for 3 years would receive a gratuity amount of several thousand rupees. The best part—this gratuity is completely tax-free.
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Provides financial security even for those who switch jobs frequently
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Offers a lump sum amount at retirement or resignation
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Boosts trust and loyalty towards employers
The new labour codes have significantly eased concerns around gratuity, extending the benefit beyond long-term employees. This reform not only strengthens financial security for workers but also gives them greater freedom and flexibility in managing their careers.
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