In a major relief for the workforce across India, the central government has introduced a significant change in labour regulations, allowing employees to receive gratuity after just one year of service instead of the earlier requirement of five years. The update will apply across sectors, bringing millions of workers—especially those in fixed-term employment—under improved social security coverage.
Employees to Get Gratuity After 1 Year of Service Under Updated Labour Laws
Under the new labour framework, fixed-term employees will now enjoy the same gratuity benefits as permanent employees, provided they complete one year of continuous service. The move is being seen as a major step towards protecting contract workers, boosting workforce morale, and ensuring fair treatment in modern employment environments.
Labour experts believe this reform will benefit industries such as manufacturing, retail, hospitality, healthcare, IT services, and gig-based sectors where fixed-term contracts are widely used. The reduced service requirement is expected to encourage job mobility while assuring employees that their tenure—however short—will still earn them social protection.
Industry bodies and business groups say that although the rule will increase financial liability
Industry bodies and business groups say that although the rule will increase financial liability for employers, it will also improve worker retention and overall productivity. Many have welcomed the decision as a progressive step that aligns India’s labour regulations with global standards.
For employees, the announcement has come as a major relief, especially for those working on short-term projects or seasonal contracts. The change will ensure that even a year of service is recognised and financially compensated, strengthening worker welfare across the nation.
The new rule is expected to be formally notified along with the implementation of the updated labour codes. Once enforced, it will mark one of the most transformative shifts in India’s labour landscape in recent years.