Gratuity Eligibility Under New Wage Code 2021: Do Employees Qualify After Just 1 Year?

Eligibility for Gratuity Under the New Wage Code 2021

As the new wage code 2021 is set to commence on April 1st, 2021, can it be concluded that employees who leave the organization after April 1st, 2021, become eligible for the payment of gratuity without completing the period of 4 years and 240 days but have served for a 1-year duration?

Calculation Formula for Gratuity

If yes, will the formula currently used for the calculation of the amount remain the same, or have some changes been proposed in that as well?

Regards

Dear Abhishek,

I would like to request you to kindly go through the provisions of sec. 53 of the Code on Social Security, 2020, along with a combined reading of sec. 54, which deals with continuous service for the purpose of gratuity. This is almost similar to the definition of the term "continuous service" as found in sec. 2-A of the Payment of Gratuity Act, 1972.

Prominent Changes in Gratuity Under the Code

However, the prominent changes pertaining to the minimum qualifying service for gratuity under the Code are the following:

A) The minimum qualifying service or continuous service is:
- Three (3) years in respect of working journalists as defined under section 2(f) of the WJ&ONPE Act, 1955.
- The completion of continuous service of five years shall not be necessary in respect of the expiration of fixed-term employment.

B) No change in the formula for the calculation of gratuity.