No gratuity payment for initial years of service: New Labour Law Code Rules-
New Labour Law Code – The Code on Social Security, 2019, the effective date is yet to be notified by the Govt. though this Code itself has been notified after formal approval by the President of India on 28.9.20. It's speculated that it can happened in Dec.20.
It was agreed on part of easing compliance for business, to subsume the nine major labor laws which include as follows:
1.The Employee provident fund Act, 1952;
2.Social Security Act, 2008; 3.Maternity Benefit Act,1961;
4.Employee State Insurance Act,1948;
5.Employee Compensation Act, 1923;
6.Cine workers welfare fund Act,1981;
7.Unorganized Worker’s Social Security Act,2008;
8.Building and other construction workers Cess Act,1996 and
9.The Payment of Gratuity Act, 1972 under a single labor Code
Within the new Labour Law Code, with the help of concerned stakeholders and authorities, the government has notified for a provision for the reduction of the eligibility criteria for payment of gratuity and related rules which were being followed for decades.
The Code under its Chapter V – Rules for Gratuity now prescribes for a reduction in tenure for the payment gratuity to employees in some exceptional circumstances even if they had not completed their five years of service with the organization.
Here’s a quick view of the said rules for Gratuity in the Proposed Social Security Code, 2019-
Present Rules for Payment of Gratuity
The Payment of Gratuity Act 1972 says for ‘’the payment of gratuity to the employee – on termination of his employment service when the employee has rendered his service to the organization continuously for not less than 5 years and claims for gratuity in superannuation, death or disablement or on his retirement or resignation.’’
Provided further that “completion of a term of 5 years will not be necessary for claims made in case of death or disablement of the employee .’’
That's to say, the said rules state that other than in the situation of death or disablement employees would not be able to claim gratuity before completion of their five years of service.
New Guidelines under Proposed Code of Social Security for Payment of Gratuity -
The Code on Social Security, 2019 under its Chapter V–Gratuity says for ‘’the payment of gratuity to the employee on termination of his employment service when the employee has rendered his service to the organization for not less than 5 years and claims for gratuity can be done : On his superannuation, On his retirement or resignation or
On his death or disablement due to some accident or disease or
On termination of his contract period under fixed-term employment or ; On the happening of any such event as may be notified by the Central Government.
Provided that completion of the said period of service shall not be required in case of termination of employment of employee due to death or disablement or expiration of fixed employment or on happening of any such event as may be notified by the Central Government.
In otherwords, the above rules no condition for completion of 5 years service period has been placed for the employees for claiming their gratuity amount on death and disablement and on termination of the contract period and on any specific event as may be notified by the Central Government timely.
The calculation for Payment of Gratuity
The proposed Code on Social Security, 2019 shall be equally applicable like all other labour laws and codes on all employees including the white-collar and industry employees.
As per the Code, calculation of the gratuity amount shall be done in a similar manner as it was indicated in the past law. Gratuity will be paid at the rate of 15 days wages for every completed year of service or part thereof in excess of six months or for such a number of days as may be notified by the Central government based on the rate of wages last drawn by the employee concerned.
For employees receiving monthly wages or salaries, 15-day wages will be calculated using the following formula:
“15 days wages: Last salary drawn/26 x15.”
Note: The Code rules prescribed for gratuity shall not be applicable to Central or State government employees or on employees governed by any other act which prescribes different rules for payment of gratuity.
We have to await the notification for "from when the Labour Codes" would come to effect.
From India, Bangalore
1073New Labour Law Code – The Code on Social Security, 2019, the effective date is yet to be notified by the Govt. though this Code itself has been notified after formal approval by the President of India on 28.9.20. It's speculated that it can happened in Dec.20.
It was agreed on part of easing compliance for business, to subsume the nine major labor laws which include as follows:
1.The Employee provident fund Act, 1952;
2.Social Security Act, 2008; 3.Maternity Benefit Act,1961;
4.Employee State Insurance Act,1948;
5.Employee Compensation Act, 1923;
6.Cine workers welfare fund Act,1981;
7.Unorganized Worker’s Social Security Act,2008;
8.Building and other construction workers Cess Act,1996 and
9.The Payment of Gratuity Act, 1972 under a single labor Code
Within the new Labour Law Code, with the help of concerned stakeholders and authorities, the government has notified for a provision for the reduction of the eligibility criteria for payment of gratuity and related rules which were being followed for decades.
The Code under its Chapter V – Rules for Gratuity now prescribes for a reduction in tenure for the payment gratuity to employees in some exceptional circumstances even if they had not completed their five years of service with the organization.
Here’s a quick view of the said rules for Gratuity in the Proposed Social Security Code, 2019-
Present Rules for Payment of Gratuity
The Payment of Gratuity Act 1972 says for ‘’the payment of gratuity to the employee – on termination of his employment service when the employee has rendered his service to the organization continuously for not less than 5 years and claims for gratuity in superannuation, death or disablement or on his retirement or resignation.’’
Provided further that “completion of a term of 5 years will not be necessary for claims made in case of death or disablement of the employee .’’
That's to say, the said rules state that other than in the situation of death or disablement employees would not be able to claim gratuity before completion of their five years of service.
New Guidelines under Proposed Code of Social Security for Payment of Gratuity -
The Code on Social Security, 2019 under its Chapter V–Gratuity says for ‘’the payment of gratuity to the employee on termination of his employment service when the employee has rendered his service to the organization for not less than 5 years and claims for gratuity can be done : On his superannuation, On his retirement or resignation or
On his death or disablement due to some accident or disease or
On termination of his contract period under fixed-term employment or ; On the happening of any such event as may be notified by the Central Government.
Provided that completion of the said period of service shall not be required in case of termination of employment of employee due to death or disablement or expiration of fixed employment or on happening of any such event as may be notified by the Central Government.
In otherwords, the above rules no condition for completion of 5 years service period has been placed for the employees for claiming their gratuity amount on death and disablement and on termination of the contract period and on any specific event as may be notified by the Central Government timely.
The calculation for Payment of Gratuity
The proposed Code on Social Security, 2019 shall be equally applicable like all other labour laws and codes on all employees including the white-collar and industry employees.
As per the Code, calculation of the gratuity amount shall be done in a similar manner as it was indicated in the past law. Gratuity will be paid at the rate of 15 days wages for every completed year of service or part thereof in excess of six months or for such a number of days as may be notified by the Central government based on the rate of wages last drawn by the employee concerned.
For employees receiving monthly wages or salaries, 15-day wages will be calculated using the following formula:
“15 days wages: Last salary drawn/26 x15.”
Note: The Code rules prescribed for gratuity shall not be applicable to Central or State government employees or on employees governed by any other act which prescribes different rules for payment of gratuity.
We have to await the notification for "from when the Labour Codes" would come to effect.
From India, Bangalore
Ok... now, since the date from which it is effective isn’t told yet, and in this case, if my employer settles my gratuity, I’ll be paid for 6 years?
And at a later date when the Effective date is declared, will they have to reprocess and pay the difference?
From India, Bengaluru
And at a later date when the Effective date is declared, will they have to reprocess and pay the difference?
From India, Bengaluru
Ms.Anuradha would be entitled to gratuity for her service upto the date of her resignation irrespective of the leave being LOP or otherwise as stated by Mr. K.K.H!R.
The Code on Social Security will have only prospective effect from its date of notification and I hope it would not be given retrospective effect as it would give rise to thousands claims already settled.
From India, Salem
The Code on Social Security will have only prospective effect from its date of notification and I hope it would not be given retrospective effect as it would give rise to thousands claims already settled.
From India, Salem
You can refer to Section 2(A) (1) of the Payment of Gratuity Act 1972, quoted below :
2A. Continuous service.--For the purposes of this Act,--
(1) an employee shall be said to be in continuous service for a period if he has, for that period, been in uninterrupted service, including service which may be interrupted on account of sickness, accident, leave, absence from duty without leave (not being absence in respect of which an order treating the absence as break in service has been passed in accordance with the standing orders, rules or regulations governing the employees of the establishment), lay-off, strike or a lock-out or cessation of work not due to any fault of the employee, whether such uninterrupted or interrupted service was rendered before or after the commencement of this Act;
Since you have uninterrupted service from 16.12.2013 to 25.08.2020, you are eligible to receive gratuity for the whole period of seven years.
From India, Mumbai
2A. Continuous service.--For the purposes of this Act,--
(1) an employee shall be said to be in continuous service for a period if he has, for that period, been in uninterrupted service, including service which may be interrupted on account of sickness, accident, leave, absence from duty without leave (not being absence in respect of which an order treating the absence as break in service has been passed in accordance with the standing orders, rules or regulations governing the employees of the establishment), lay-off, strike or a lock-out or cessation of work not due to any fault of the employee, whether such uninterrupted or interrupted service was rendered before or after the commencement of this Act;
Since you have uninterrupted service from 16.12.2013 to 25.08.2020, you are eligible to receive gratuity for the whole period of seven years.
From India, Mumbai
Thank you for your time and patience! I appreciate the help. I definitely need to quote these sections since my hr is oblivious, and is telling me that I’m eligible for gratuity only till 2019...
Thanks again!
From India, Bengaluru
Thanks again!
From India, Bengaluru
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Gratuity Eligibility.pdf
Gratuity eligibility for less than 5 yrs. (4yrs.240days). docx