Gratuity: Even after the rules were changed, gratuity payments are not being received even after a year, and this is the reason..

When the government announced the new labor codes, millions of private sector employees believed that there would be a significant improvement in workplace benefits. The most discussed aspect was that employees on fixed-term contracts would be eligible for gratuity after just one year of service. However, in reality, most employees are still not receiving this benefit. The question is, why is gratuity not being paid after one year, even after the rules have changed?

What were the previous gratuity rules?
Until now, in India, an employee had to work continuously for five years in the same company to be eligible for gratuity. This rule was fine for permanent employees, but it proved almost impossible for those on fixed-term and contract jobs. Many employees change jobs or their contracts end before completing five years.

What changed in the new labor codes?
In the new labor codes, the government clarified that if a fixed-term employee completes one year of service, they should receive gratuity based on that one year of service. The government believed that in today's job market, people don't stay with the same company for long periods, so social security benefits should be available sooner.

Why hasn't the new rule been implemented?
This is where the real problem begins. In India, labor laws fall under the Concurrent List. This means that the central government can make laws, but the responsibility for implementing them lies with the state governments. Until the state governments notify their rules (labor rules), companies are not legally obligated to implement the new laws.

Why are companies still following the old rules?
Due to the lack of clear rules from the state governments, most companies are still operating under the old gratuity laws. Companies fear that if they implement the new rules on their own, they might face legal complications later, such as audits, investigations, or retrospective payments. Therefore, they are choosing the safer option and sticking to the five-year rule.

What does the government say? The Labour Ministry has repeatedly clarified that under the new codes, fixed-term employees should be entitled to gratuity upon completing one year of service. However, the ministry itself acknowledges that this provision will remain on paper until the states finalize their respective rules.

Not just gratuity, other benefits are also stalled
Along with gratuity, several other major changes related to the new labour codes are also on hold. Changes in salary structure, social security for gig workers, working hours, overtime, and rules related to retrenchment are also awaiting approval from the states. Until these rules are implemented, employees will not receive these benefits.

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