24/04/2026
There is a common misunderstanding that gratuity is now payable after 1 year of service for all employees. This is not correct.
Under the Code on Social Security, 2020, a specific provision has been introduced for Fixed Term Employees (FTEs):
A Fixed Term Employee is eligible for gratuity on a pro-rata basis, even if they complete less than 5 years of service, provided they have completed the term of their contract (for example, 1 year).
Important Clarification:
This benefit is only applicable to Fixed Term Employees.
For other categories:
- Regular Employees
- Contract Employees (through contractor)
The existing rule remains unchanged:
Minimum 5 years of continuous service is required to become eligible for gratuity (except in cases of death or disablement).
Key Takeaway:
- Fixed Term Employees → Eligible after completion of contract (even 1 year, pro-rata gratuity)
- Regular & Contract Employees → 5 years rule still applies
Note for Employees:
Do not confuse Fixed Term Employment with regular employment. Eligibility depends on the nature of employment contract, not just the duration of service.
