The minimum of 5 years of service rule for gratuity may soon be discarded. Apart from this, employees working on fixed-term will also be able to claim gratuity. Relevant Labor reforms to bring in these changes may soon be approved.
Gratuity payment rules will now be more lenient as employees will not have to spend 5 years in a company before they could claim gratuity.
As per the new rules, employees will be eligible to receive gratuity after one year of service. The time limit rule might be removed and the employees will get gratuity according to the days they have worked for.
Moreover, those hired under fixed-term contracts will also be able to reap the benefits of gratuity. However, there is no mention of a time limit in the Social Security Code.
The Standing committee might submit its report on the matter this month. The government will seek Parliament’s approval on the labour code.
Keeping the time limit as 1 year instead of 5 years (in order to be eligible to claim gratuity) will prove to be beneficial for thousands of employees.
What is the current set-up?
An employee becomes eligible for claiming gratuity after completion of 5 years of service. If the employee leaves the job before 5 years, he cannot make the claim.
An important rule related to gratuity is that if the employee dies before 5 years of service, then the company he worked for is entitled to pay the gratuity to his family. Moreover, if an employee becomes disabled due to an accident or disease, the employer has to pay gratuity to him.
Several new provisions in the labor code
Finance Minister Nirmala Sitharaman also spoke about several other provisions in the Labor Code.
A social security scheme will be launched for platform employees and a re-skilling fund will be established for retrenched employees.
Apart from this, there will be a provision of social security fund for employees belonging to the unorganized sector.
The right to minimum wages and timely payment of salary will be made available to all employees, including the ones from the unorganized sector. Currently, the minimum wage rule only applies to 30 percent of employees.
Provision for annual health checkups
Legal provisions will be introduced for the national floor wage. This will reduce regional disparity in minimum wages.
Determining the minimum wage will be made easier. All the employees will be given appointment letters.
Moreover, annual health checkups will be organized for the employees.
The definition of an inter-state employee will be changed to include migrant laborers directly employed by the employer.
Apart from this, there will be the portability of welfare benefits for migrant laborers. ESIC coverage will also be expanded across India and this will include all the districts and institutions with 10 or more employees.