New Delhi. With the beginning of the new financial year, the rules for calculation and eligibility of gratuity for employees have changed. According to the new labor codes that came into effect from April 1, 2026, now employees can get more gratuity than before.
What is the change in the new gratuity rules?
In the old rules, gratuity was calculated only on the basis of basic salary and dearness allowance (DA). According to the new rules, now retaining allowance will also be included and it is mandatory for this part of the salary to be at least 50 percent of the total CTC.
This means that companies will no longer be able to keep the basic salary low for the basis of gratuity. For example, if earlier the gratuity of an employee was Rs 1.44 lakh, then according to the new rules it may increase to around Rs 2 lakh or more.
Impact on take-home salary and PF
The increased basic salary will also affect the take-home salary and PF contribution of the employees. Since PF is calculated on basic salary, increasing PF contribution may lead to a slight reduction in the monthly salary. But in the long run, this change will strengthen employees’ retirement benefits.
Eligibility for Gratuity
According to the new Code on Social Security 2020, now fixed-term employees have also started getting the benefit of gratuity. While regular employees had to complete 5 years of service for gratuity, fixed-term employees will get gratuity on pro-rata basis only after completing 1 year of service. Apart from this, if an employee works for more than 6 months in the last year, he will be considered as having served one full year. This will make it easier for employees to get gratuity.
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