The claim that “every employee will now receive gratuity after one year” is not a universal rule. The rules differ for regular employment, fixed-term employment, and situations such as death or disablement.
Section 53 of the Social Security Code provides for the general requirement of five years of continuous service, along with specified exceptions. The official labour FAQ expressly states that a fixed-term employee is eligible after one year of service under the contract. This does not automatically remove the five-year rule for a regular employee who resigns. First check the establishment’s coverage and the employment category.
What should you do now?
- Check the appointment contract to identify whether the status is permanent or fixed-term.
- Compare the records for the joining date, last working day, and continuous service.
- Request a written breakup of the last drawn statutory wages and the applicable calculation.
Which documents should you keep?
Appointment documents, service dates, salary structure, attendance records, and the gratuity calculation.
Avoid this mistake
It may be incorrect to treat the entire CTC as gratuity wages in every case, or to apply the old basic-only formula without checking the new definition.
A hypothetical example
One permanent employee resigns after one year, while another completes a genuine fixed-term contract. Do not apply the same social-media headline to both when considering gratuity. Check the contract category and statutory conditions separately.
Are four years and 240 days a definite rule throughout the country?
Do not treat this as a universal guarantee; the applicable law, service facts, and relevant judicial position must be checked.
Legal basis and useful sources
- Code on Social Security, 2020 — updated as of 21 November 2025
- Government Labour Code FAQ — gratuity eligibility for fixed-term employees
This is general legal information. The advice applicable to you may differ depending on your facts, the applicable law, and state rules.