Gratuity under the new Labour Codes: who gets it and how much

What changed in November 2025

On 21 November 2025, four Labour Codes came into force and replaced 29 older central labour laws. Gratuity, earlier paid under the Payment of Gratuity Act, 1972, is now governed by the Code on Social Security, 2020. Some rules made by the Centre and States are still being finalised, so check with your employer or the labour department for details that apply to you.

Who gets gratuity

• Permanent employees: after at least five years of continuous service, when you resign, retire or your employment ends.
• Fixed-term employees (hired on a contract for a set period): after one year of service. This is the biggest change under the Code.
• Death or disablement: the five-year condition does not apply. Gratuity is paid to the employee or their nominee.

How it is calculated

Gratuity is 15 days’ wages for every completed year of service, based on your last drawn wages. For employees paid monthly, the usual calculation is:

Last drawn wages × 15 × years of service ÷ 26

Example: last drawn wages of ₹30,000 a month and 10 years of service: 30,000 × 15 × 10 ÷ 26 = ₹1,73,077.

The Labour Codes use a wider definition of “wages” than before, so for many employees the wages used for gratuity, and the gratuity itself, are higher.

When it must be paid

Your employer must pay gratuity within 30 days of it becoming due. If they delay, they must also pay interest.

If your employer doesn’t pay

1. Apply to your employer in writing, keeping a copy and proof of delivery.
2. If they refuse or don’t respond, complain to the authority under the Code at your local labour department (Labour Commissioner’s office), with your appointment letter, salary slips and resignation or relieving letter.

For other workplace problems, see our guides in Work & salary.