When the government announced the new labor code, millions of private sector employees felt that workplace benefits would be greatly improved. The most discussed issue was that employees working on fixed term basis would be able to get gratuity only after one year of service. But actually even today most of the employees are not getting this benefit. The question is that even after changing the rules, why is the gratuity not being received in one year?
What was the rule of gratuity earlier?
Till now in India any employee had to work continuously for five years in the same company to get gratuity. This rule was fine for those with permanent jobs, but it proved almost impossible for those working on fixed term and contract basis. Many employees change jobs or have their contracts expire before five years are up.
What has changed in the new labor codes?
In the new labor codes, the government has clarified that if a fixed term employee completes one year of service, he should get gratuity according to that one year. The government believed that in today’s job market people do not stay with one company for long, so social security should be provided early.
Then why was the new rule not implemented?
The real problem starts here, labor laws in India fall under the concurrent list. This means that the central government can make laws, but the responsibility of implementing them lies with the state governments. Until state governments notify their labor regulations, there is no legal pressure on companies to implement the new laws.
Why do companies follow the old rules?
Most of the companies are still working under the old gratuity laws due to the lack of clear rules from the state governments. Companies fear that if they implement the new rules at their level, they may face legal issues such as audits, investigations or backdated payments in the future. So, choosing the safe route, they are sticking to the five-year rule.
What does the government say?
The Ministry of Labor has clarified several times that under the new codes, a fixed-term employee should get gratuity after completing one year. But even the ministry itself believes that this provision will remain only on paper till states finalize their rules.
Not only gratuity, other benefits were also stopped
Along with gratuity, several other major changes related to the new labor codes are also on hold. Changes in pay structure, social security for gig workers, rules related to working hours, overtime and retrenchment are also awaiting states’ approval. Until these rules are implemented, the employees will not get their benefits.