Gratuity 2025: After the new Labor Code, major changes have been made in the gratuity rules. Now fixed-term and contract employees working for 1 year will also get gratuity, gratuity will be decided on the basis of higher salary and the amount can increase by 25-50% from before.
Gratuity 2025 Important Updates: The government keeps changing labor laws from time to time, to make the life of employees easier. Gratuity is also one such way, by which the employee gets a money package at the time of retirement. The last major change was in 2018, when the tax-free gratuity limit was increased from ₹10 lakh to ₹20 lakh. But after the implementation of new labor codes in 2025, there have been many major changes in gratuity. Let us know 5 big changes, which every salaried employee should know about.
1. Fixed-term and contract employees will now get gratuity in just 1 year
Earlier, to get gratuity it was necessary to work continuously for 5 years. This meant that employees working on projects or contracts often did not receive gratuity. Now there has been a change. According to the new rules, fixed-term employees will also be entitled to gratuity after working for only 1 year. Lakhs of employees working in IT, media, manufacturing or construction sectors will no longer be deprived of gratuity.
2. Gratuity will now be calculated on higher salary
Earlier gratuity was based only on basic salary. Now according to the new definition of salary, many types of allowances will be included in the salary. This means the amount of gratuity may increase by 25-50%. Retirement amount will also increase for employees working for a long time.
3. Tax-free gratuity limit
The tax-free limit for private sector employees remains Rs 20 lakh. For central government employees it is Rs 25 lakh. This change ensures that employees continue to get tax benefits on gratuity.
4. Gratuity now applicable to more employees
With the new rules of 2025, gratuity rights will now be available to many other employees as well. These include fixed-term and contract employees, seasonal employees (share will be given as per time), project or assignment based employees.
5. Companies will have to show responsibility for gratuity
Companies will now have to clearly show their gratuity responsibilities. This will show how much amount has to be paid to the employees in the future. The HR team can change the salary structure according to the future. Employees will benefit from this and the guarantee of them receiving gratuity on time will increase.
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