Gratuity for fixed term contract employee

NO. you are not eligible for gratuity. gratuity rules is that minimum 5 years continue working in an establishment.

Contract employee for 1 year is ineligible for gratuity.

CTC is only a management tool.

The biggest change brought to the Industrial Employment (Standing Orders) Act, 1946 may be found under Section-53(1)(d) of the Code on Social Security. It provides that gratuity shall be payable on the termination of the contract period under fixed-term employment. The second proviso under the above states that the five years continuous service requirement shall not be necessary in cases of expiration of fixed-term employment. The third proviso to Section-53(2) stipulates that in the case of fixed-term employee’s gratuity shall be paid on a pro-rata basis.

Fixed-term employment defined under Section-2(o) of the IR Code contains a clause stating that fixed-term workers become eligible for gratuity if they render service under their contract for a period of one year.

This might prompt one to conclude that the one-year requirement is applicable only to workers and not to employees. However, the proviso to Rule-35(a) of the draft Code on Social Security (Central) Rules, 2020 provides us with clarity on the same. It clearly states that an employee on fixed-term employment shall be eligible for gratuity if he renders service under the contract for a period of one year.

Regards,

Anaita Vas

No