New social security code proposes a differential employment ceiling for gratuity payments

NEW DELHI: The new social security code has proposed differential employment ceiling for gratuity payments that is linked to the nature of work to ensure workers are not denied benefits. The move is aimed to redress the issue of employees losing gratuity payments if they have not completed the mandatory ceiling of five years of employment.

As per the code introduced in the Lok Sabha on Saturday, gratuity for fixed-term workers will be linked to their tenure of work.

Gratuity for seasonal workers will be equivalent to salary for seven days for every season of work undertaken.


The standing committee on labour had recommended gratuity eligibility criteria to be reduced between one and three years since duration of jobs have reduced in general and more and more contract workers are hired.

Trade unions also feel that often employees retrench workers before the completion of five years to forfeit the gratuity contribution of the workers.