Gratuity in new wage code

Ask the Community Statutory Compliance
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1

Hi community-

In the new wage code, are there changes coming to gratuity benefits or how it is calculated?

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2

Hi Ramya,

The new Code on Wages has not altered any existing rules under the Gratuity Act. It remains the same i.e., Half a month’s basic salary multiplied by the number of years of completed service.

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Hi Ramya,

The Code on Wages (also known as wages code) is the Code that will replace 4 Acts, i.e., the Minimum Wages Act, the Payment of Wages Act, the Payment of Bonus Act, and the Equal Remuneration Act.

The provisions of Gratuity will be covered under the Code on Social Security. Under this Social Security Code, the provisions of Gratuity remains the same except for a few add-ons viz.,:

i) Gratuity is payable on the termination of the contract period under fixed-term employment. The employer shall pay gratuity on a pro-rata basis and not on the basis of continuous service of five years.

ii) The amount of gratuity payable to an employee shall not exceed such amount as may be notified by the Central Government (20 lac threshold will be removed).

iii) The working journalist’s gratuity threshold period gets reduced from five to three years.

Stay tuned with us to know more in detail about all 4 labour codes.

Hope the above helps for the time being.

Regards,
Bhuvana Anand

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