Under Section 53 of the Code on Social Security, 2020,

Solution

Under Section 53 of the Code on Social Security, 2020, the Central Government has reduced the eligibility requirement for gratuity for Fixed-Term Employees (FTEs) from five years to one year of continuous service. This is one of the most worker-friendly reforms in the Code previously, since fixed-term contracts were typically shorter than 5 years, most FTEs were entirely excluded from gratuity under the Payment of Gratuity Act, 1972. Under the Code, gratuity shall be payable on a pro-rata basis to FTEs who complete one year of continuous service, calculated in proportion to the period of service rendered. This reform aligns gratuity eligibility with the nature of fixed-term employment and prevents employers from denying gratuity by structuring contracts just below the 5-year threshold. It is important to note that the 5-year threshold continues to apply for all other regular employees the reduction to 1 year is exclusively for Fixed-Term Employees.