- Hindi News
- Utility
- New Labour Codes 2025: Gratuity ₹20 Lakh, Double OT, 26 Week Maternity Leave
New Delhi15 hours ago
- copy link
Under the new labor codes, gratuity up to Rs 20 lakh will be tax-free.
The central government has created four new codes by merging 29 old labor laws, which have been implemented from Friday. With the new law, the employee will get the benefit of gratuity in only 1 year instead of 5. Apart from this, the limit of gratuity has been increased to Rs 20 lakh, which will remain tax-free.
You will get double wages for overtime and 1 day paid leave for every 20 days of work. Crores of laborers and employees will benefit from the new labor code. These changes will provide better protection to workers, but will increase the compliance burden on employers.
New Labor Codes: 29 laws changed to four
The Central Government had for a long time tried to simplify the Labor Laws. Earlier there were 29 different central labor laws, which were confusing. Now these have been changed into four codes – Code on Wages, Industrial Relations, Social Security and Occupational Safety.
These codes were passed in 2020, but there was a delay in making the rules. Now states will also have to update their rules accordingly. According to the Labor Ministry, this will ease business ease and strengthen the rights of workers. These will be implemented across the country from April 2025, which will benefit more than 50 crore workers.
Changes in Gratuity: Tax-free up to Rs 20 lakh, 10% interest on delay
- The biggest update is of gratuity. With the new law, now the employee will be able to get the benefit of gratuity in just 1 year instead of 5 years. At the same time, the limit of tax-free gratuity has been increased from Rs 10 lakh to Rs 20 lakh.
- This amount will be tax-free, that is, the employee will get the full amount of gratuity. The employer will have to pay the gratuity within 30 days. If there is delay, 10% annual interest will be charged and the compensation may also be double.
- This will be applicable in both private and public sector. For example, if an employee works for 5 years, he will get 15 days’ wages for every year. This change will increase financial security at the time of retirement.
The central government has created four new codes by merging 29 old labor laws, which will come into effect from April 1.
Double overtime pay: Double wages for work more than 9 hours.
Overtime rules have also become strict. Now you will get double the rate for work more than 9 hours in a day or 48 hours in a week. Earlier it was not double. But overtime will be mandatory only in emergencies, such as breakdown in a factory.
Workers can also get compensatory off instead of money. One holiday in a week will be necessary. This provision is especially beneficial for factory workers and contract employees. Labor experts say that this will help companies reduce unnecessary overtime, but workers’ earnings will increase.
Now you will get 26 weeks maternity and 15 days paternity leave.
Leave rules have also improved. You will get 1 day paid leave for every 20 days of work. Earned leave has been increased from 15 to 30 days annually, but it will be applicable after 1 year of service. Maternity leave was increased from 12 weeks to 26 weeks, which is a big relief for women.
For the first time, paternity leave of 15 days and adoption leave were also introduced. After 3 months of service, fixed-term employees will also get the same benefits as permanent workers. These changes will improve work-life balance.
Social security and gig workers covered: 0.65% contribution required
Social security has been strengthened in the new codes. Employers will have to contribute 0.65% of wages to the EDLI scheme, which will provide life and disability cover. Workers in the unorganized sector will get life insurance and health benefits for the first time.
Gig and platform workers, like Uber drivers or food delivery boys, will get health insurance, accident cover and social security. With the Fixed-Term Employment Code, contract workers will get the same rights as permanent workers. It is necessary to register shops and establishments online, failing which a fine of up to Rs 5 lakh will be imposed.
With the implementation of new codes, workers’ earnings and safety will increase.
With the implementation of these new codes, the earnings and safety of workers will increase. You will get extra income from overtime and gratuity. Leave will provide family time. But the contribution and penalty expenses of the companies will increase. The Labor Ministry believes that this will lead to job creation.
States have been given 4 months to make rules. Experts say that these new codes will take India closer to global labor standards. Overall, these changes will modernize the labor market.
How much gratuity will you get for one year’s service?
The formula for calculating gratuity is the same…
Gratuity = Last Basic Salary × (15/26) × Total Service (in years)
Suppose the last basic salary of an employee is Rs 50,000 and he leaves the job after working for 1 year, then the gratuity will be given as follows…
50,000 × (15/26) × 1 = Rs 28,847
That means an employee can get a gratuity of up to Rs 28,800 for one year’s service.
What is gratuity?
Gratuity is a financial assistance given by the company to its employees, which can also be called appreciation amount in a way. It is decided on the basis of your service and salary.
