Business Desk, ETV Bharat: The Parliament passed three key labour welfare reforms on Wednesday, including the Social Security Code 2020 that changes the gratuity rules for the salaried class in India.
Instead of a flat five-year rule that existed till now, the new Social Security Code introduces different thresholds for different category of workers to allow more and more people to get gratuity benefits.
Here is a list of categories and the gratuity rules that apply to each of them:
1) Permanent employees: Gratuity shall be payable to permanent employees on the termination of their employment after they have rendered continuous service for five years or more.
The completion of continuous service of five years shall not be necessary where the termination of the employment is due to death or disablement of the employee.
For every completed year of service or part thereof in excess of six months, the employer shall pay gratuity to an employee at the rate of 15 days’ wages, based on the rate of wages last drawn by the employee concerned.
2) Piece-rated employees: Workers who do not earn fixed wages and are rather paid a fixed rate for each unit they produce are called piece-rated employees.
The new law provides that in case of a piece-rated employee, daily wages shall be computed on the average of the total wages received by him for a period of three months immediately preceding the termination of his employment. For this purpose, the wages paid for any overtime work shall not be taken into account.
Read more: NHSRL opens technical bid for Mumbai-Ahmedabad rail corridor
3) Seasonal workers: In case an employee is employed in a seasonal establishment and is not employed throughout the year, the employer shall pay the gratuity for each season at the rate of seven days’ wages.
4) Fixed-term employees: The biggest change would be for fixed-term employees who will now be paid gratuity on a pro-rata basis, i.e. depending on the tenure of their work, even if the period of the fixed-term contract is less than five years.
Keeping the categories aside, it is important to note that the new code also makes a provision under which the gratuity of any kind of employee -- whose services have been terminated for any act, wilful omission or negligence causing damage to the employer – can be forfeited to the extent of the damage or loss so caused.
Also, the gratuity payable to an employee may be wholly or partially forfeited if his/her services have been terminated for disorderly conduct or any other act of violence, or for any act which constitutes an offence involving moral turpitude.
