New Labour Code: Are Permanent Employees Eligible For Gratuity After 1 Year?
If you’re a full-time employee wanting to get gratuity after one year, hang on! The good news is surrounding, but the actual situation is a bit less fantastic. Gratuity in India is not a short-term prize; rather, it is a lot like a loyalty bonus for those who stay for a long time. Permanent employees must still serve continuously for five years before being eligible. Think of it as a long-term commitment in the corporate world where the benefits come only when the commitment is done.
There could be a misunderstanding due to the recent Labour Code changes; however, the one-year gratuity benefits apply only to fixed-term employees and contract workers, not full-timers. So if you are a permanent employee expecting that early payout, you better get ready to enjoy the ride.
The bright side of the story? Once you hit that five-year mark, gratuity will be your just reward, like a money pat on the back for your service and endurance.
New Labour Code Changes: Who Gets Gratuity After 1 Year?
The revised Labour Codes (effective November 21, 2025) reduced the eligibility period to one year only for:
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Fixed-term employees
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Contract workers
This change ensures fair benefits for short-term workers who usually cannot complete five years.
Understanding Gratuity: Why Loyalty (Usually) Pays After Five Years
The Gratuity Eligibility Rules for Permanent Employees are not as easy as they seem at first glance; they are wrapped in an “if you are loyal, you will be rewarded” theme. A permanent employee who wishes to get gratuity before the five-year mark would be disappointed; there is no such shortcut. The golden rule is unambiguous: only after five years of uninterrupted service with one employer will you be entitled to the benefit.
No halfway surprises, no early payouts, and certainly no “one-year bonus” magic unless you meet very specific conditions. And what are they?
Only the most serious ones, death or permanent disablement through an accident or disease. In those sad situations, the gratuity is given right away to the employee or his/her nominee/heir without the five-year delay. It’s a system that not only rewards long-term commitment but also provides a safety net for employees when unexpected life events occur. So, if you’re dreaming of that gratuity, be patient, remain steady, and let the years of service count!
Gratuity Calculation & Payment Overview
| Aspect | Details |
|---|---|
| How Gratuity Is Calculated | • Based on last drawn salary (Basic + Dearness Allowance) • Calculated using a predefined statutory formula • Under new labour codes, wages must be at least 50% of total remuneration — this may increase payout amounts |
| Gratuity Payment Timeline | • Once eligible, the employer must pay the gratuity amount within 30 days of separation, resignation, or retirement |
Also Read: How Termination Will Be Less Painful Under New Labour Codes:…
Aishwarya is a journalism graduate with over three years of experience thriving in the buzzing corporate media world. She’s got a knack for decoding business news, tracking the twists and turns of the stock market, covering the masala of the entertainment world, and sometimes her stories come with just the right sprinkle of political commentary. She has worked with several organizations, interned at ZEE and gained professional skills at TV9 and News24, And now is learning and writing at NewsX, she’s no stranger to the newsroom hustle. Her storytelling style is fast-paced, creative, and perfectly tailored to connect with both the platform and its audience. Moto: Approaching every story from the reader’s point of view, backing up her insights with solid facts.
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