Payment of Gratuity Act, 1972: The primary legislation governing gratuity before being subsumed under the new codes.

Eligibility: Generally, an employee must complete at least 5 years of continuous service with an employer to be eligible. This condition is waived in case of death or disablement.

Calculation: Gratuity is calculated based on the last drawn salary and the number of years of service. The formula is typically: (15 days' wages * number of years of service) / 26.

Maximum Limit: There is a statutory maximum limit for gratuity payment, currently ₹20 lakh (for employees covered under the Act).

Tax Exemption: Gratuity received is partially or fully exempt from income tax, subject to certain conditions and limits.

New Labour Codes (Code on Social Security, 2020): This code aims to universalize gratuity, extending its applicability to a wider range of establishments and workers, including contract employees and fixed-term employees.

Contract Employees: The news specifically mentions mandating gratuity for contract employees with a one-year term, significantly expanding its coverage to a previously underserved segment.

Fixed-Term Employees: The new codes also provide for pro-rata gratuity for fixed-term employees even if they don't complete 5 years of service, provided their contract is not renewed.

Payment of Gratuity Act, 1972: The primary legislation governing gratuity before being subsumed under the new codes.

Eligibility: Generally, an employee must complete at least 5 years of continuous service with an employer to be eligible. This condition is waived in case of death or disablement.

Calculation: Gratuity is calculated based on the last drawn salary and the number of years of service. The formula is typically: (15 days' wages * number of years of service) / 26.

Maximum Limit: There is a statutory maximum limit for gratuity payment, currently ₹20 lakh (for employees covered under the Act).

Tax Exemption: Gratuity received is partially or fully exempt from income tax, subject to certain conditions and limits.

New Labour Codes (Code on Social Security, 2020): This code aims to universalize gratuity, extending its applicability to a wider range of establishments and workers, including contract employees and fixed-term employees.

Contract Employees: The news specifically mentions mandating gratuity for contract employees with a one-year term, significantly expanding its coverage to a previously underserved segment.

Fixed-Term Employees: The new codes also provide for pro-rata gratuity for fixed-term employees even if they don't complete 5 years of service, provided their contract is not renewed.