Gratuity Rules Revised: Will the Notice Period Now Be Counted? Does This Result in a Gain or a Loss?
If you are employed in the private sector and are planning to switch companies at some point, "Gratuity" is a significant factor for you. However, the biggest point of confusion has always been this: will the notice period also be counted as part of your service tenure?
Now, following the implementation of the new Labor Codes, the picture regarding this matter has become much clearer. Yet, it is crucial to understand the facts—what the benefits entail, and what steps you should take—because a single piece of information could potentially yield financial gains amounting to thousands or even lakhs.
**Understand the Full Details in 4 Key Points:**
* The notice period is generally counted as part of your service tenure (provided you are on the company's payroll).
* This can make it easier to fulfill the minimum eligibility requirement of at least one year of service.
* Fixed-term employees become eligible for gratuity benefits after completing just one year of service.
* As your basic salary increases, the corresponding gratuity amount will also rise.
**Why is this rule so important?**
* Gratuity essentially represents a reward for your loyalty to the organization.
* Under the new rules, if you haven't completed a full year of service, you would typically not be eligible to receive gratuity.
* However, if the notice period is included in the calculation, you may become eligible.
* In other words, a notice period of just 2 to 3 months could translate into financial benefits worth lakhs of rupees.
**Will the notice period be counted as part of the service tenure?**
Yes, in most cases, it will be counted.
If you:
* Are on the company's official payroll;
* Are you receiving your salary
* Have your Provident Fund (PF) contributions being deducted;
...then the notice period will be considered an integral part of your service tenure.
**What does this imply?**
In simple terms:
* You are still considered an employee of the company.
* The company continues to pay your salary.
* You remain an active entity within the company's system.
* Therefore, this duration will be added to your total length of employment.
**Does this apply in every single case?**
No, there is a specific nuance here that requires attention.
You will be eligible for the benefit *only if*:
* Your notice period is officially recognized as part of your "working tenure"; and
* The company has formally accepted your resignation.
**You will receive your entire dues within 2 days (Full & Final Settlement):**
* As per Section 17(2) of the *Code on Wages*;
* The full and final payment must be disbursed within two working days following your last working day.
**To whom does this rule apply?**
Employees who have resigned
Employees dismissed by the company
Cases involving retrenchment
Gratuity rules apply equally to all
What happens in case of a delay?
Failure to receive payment within 2 days constitutes a legal violation
A complaint can be filed with the Labor Department
Employees have the right to claim interest on delayed payments
Major Changes to Gratuity Rules
Now, gratuity benefits are available after just 1 year of service (for fixed-term employees)
Previously, 5 years of service were mandatory
Gratuity to be received within 30 days
After leaving the job
Payment is mandatory within 30 days
What is the biggest benefit?
Elimination of delays in receiving funds
Enhanced security for employees
Switching jobs has become easier
What has changed for fixed-term employees?
A significant change has been introduced here
Previously: 5 years of service were mandatory
Now: Gratuity can be received after just 1 year
This means major relief for those in contract-based jobs
Disclaimer: This content has been sourced and edited from Zee Business. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.
