look news india
Gratuity Eligibility: The central government on Friday announced historic reforms in the country’s labor structure, consolidating 29 old labor laws and enacting four new labor codes. The new labor codes aim to modernize decades-old rules, provide greater flexibility to industries and provide better protection to workers.
The government said that this step will create a future-ready and strong workforce in the country, which will be able to adapt to the needs of changing times. A government statement said the new labor code will modernize labor rules, improve worker welfare and bring the labor ecosystem in line with evolving practices. These reforms will accelerate the goal of “Self-reliant India” and make industries more resilient and competitive.
What is gratuity?
Gratuity is a lump sum payment given by an employer to an employee in recognition of his long and continuous service. Earlier, gratuity required at least five years of continuous service, and this benefit was available only on retirement, resignation or termination of service. This system has been in place for decades, but the new Labor Code has brought significant changes in it.
The most significant change under the new Labor Code relates to fixed term employees (FTE). Whereas earlier five years of service was mandatory for gratuity, under the new rules now they will be able to get gratuity even after completing only one year of service. This will establish equality between fixed term and permanent employees.
What is the purpose of government?
The government aims to ensure that permanent employees receive the same salary structure, leave benefits, medical benefits and social security coverage. Additionally, 50 per cent of the total remuneration will be included in the salary calculation to ensure accurate calculation of gratuity, pension and other social security benefits.
The new rules will also provide relief to fixed term employees working in the export sector. They will now be eligible for gratuity, provident fund (PF) and other social security benefits, which will further strengthen the financial security of workers in this sector.
Shifts of 8 to 12 hours will be implemented.
Major changes have also been made in working hours under the Labor Code. Companies will now be able to implement shifts ranging from 8 to 12 hours, provided the total weekly working time does not exceed 48 hours. In addition, overtime payment will be double the normal salary, whereas earlier the daily working time was limited to 9 hours. The provisions related to contract workers have also been amended. Contractors will now have to obtain a single license to work across the country, which will be valid for five years. This will simplify the contract system and make it easier for the industry to work.
The new labor code officially recognizes gig and platform workers like cab drivers and food delivery partners for the first time. These workers will now come under the ambit of social security schemes, which will give a boost to India’s rapidly growing gig economy.
The Labor Code also formally recognizes the facility to work from home for service sector employees. This provision, based on mutual agreement between the employer and employee, will increase flexibility in the workplace and promote a modern work culture.