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+{{htmlmetatags>metatag-description=(Fixed-term employees in India now get gratuity after 1 year, not 5, under Section 53 of the Code on Social Security 2020. See the formula and how to claim it.)&metatag-keywords=(fixed-term employee gratuity, gratuity after 1 year, Section 53 Code on Social Security 2020, pro-rata gratuity, FTE gratuity claim)&metatag-robots=(index,follow)&metatag-og:title=(Fixed-Term Job? You Now Get Gratuity After 1 Year, Not 5)&metatag-og:description=(Fixed-term employees in India now get gratuity after 1 year, not 5, under Section 53 of the Code on Social Security 2020. See the formula and how to claim it.)&metatag-og:type=(article)}}
+====== Fixed-Term Job? You Now Get Gratuity After 1 Year, Not 5 ======
+**Eligibility at a glance**
+  * Are you a fixed-term employee on a written contract for a fixed period?
+  * Have you completed at least **one year** of continuous service?
+  * If yes to both, you qualify for **pro-rata gratuity** for the period you actually worked, even if you never reached the old five-year mark.
+If you are a fixed-term employee in India who has finished one full year, you are now legally entitled to gratuity on a pro-rata basis, instead of waiting the usual five years. This change took effect when the Code on Social Security, 2020 came into force on 21 November 2025.
+===== The direct answer =====
+Under Section 53 of the Code on Social Security, 2020, a fixed-term employee earns gratuity after one year of continuous service, paid pro-rata for the period worked. The old five-year minimum still applies to regular and permanent staff. The gratuity formula is unchanged: 15 divided by 26, multiplied by last drawn wages, multiplied by years of service.
+===== Worked calculation example =====
+Ramesh joins a manufacturing company in Pune on a fixed-term contract. His last drawn monthly wage (basic plus dearness allowance) is Rs 30,000. His contract runs for 3 years, and he completes all 3 years.
+Apply the formula:
+  * Gratuity = (15 / 26) x Rs 30,000 x 3
+  * Gratuity = 0.5769 x Rs 30,000 x 3
+  * Gratuity = about Rs 51,923
+Under the old rule, Ramesh would have received nothing, because he never crossed five years. Under Section 53, he is paid pro-rata for the three years he actually served. For a fixed-term worker whose service is not a whole number of years, the amount is worked out proportionately for the part-year period as well.
+===== Permanent vs fixed-term: who needs 5 years vs 1 year =====
+^ Point ^ Permanent or regular employee ^ Fixed-term employee ^
+| Minimum service for gratuity | 5 years of continuous service | 1 year of continuous service |
+| Basis of payment | Full gratuity for completed years | Pro-rata for the period worked |
+| Formula | 15/26 x last wages x years | Same formula, computed pro-rata |
+| Death or disablement | 5-year rule does not apply | 5-year rule does not apply |
+| Governing law | Code on Social Security, 2020, Section 53 | Code on Social Security, 2020, Section 53 |
+The death and disablement carve-outs continue as before: in those cases the minimum-service condition does not apply to any employee.
+===== How to claim your gratuity =====
+Gratuity is not always paid automatically, so it helps to put your claim in writing.
+  - **Apply in writing.** Submit a written application, commonly Form I, to your employer once gratuity becomes payable, usually within 30 days of your last working day.
+  - **Employer must respond.** The employer works out the amount due and tells you the figure and the date of payment.
+  - **30-day payment window.** Under Section 56 of the Code, the employer must pay the gratuity within 30 days from the date it becomes payable.
+  - **Interest on delay.** If payment is late, the employer must pay simple interest from the due date until actual payment, unless the delay was your fault and the competent authority allowed it.
+  - **Go to the controlling authority.** If the amount is disputed or unpaid, apply to the competent controlling authority under the Code. It hears both sides and directs payment of what is due.
+For a step-by-step view of how the new codes reshape your gratuity and wage rights, read our [[https://righttoinformation.wiki/new-labour-codes-2026-india-employee-rights-gratuity-wages|guide to the new labour codes]]. Fixed-term roles often affect women workers and contract staff differently, so also see [[https://righttoinformation.wiki/women-at-work-rights-new-labour-codes-india|women at work rights under the new labour codes]].
+If your employer ignores you, an RTI or a written legal demand can break the silence. The [[https://righttoinformation.wiki/book|The RTI Playbook]] explains how to escalate cleanly, and the [[https://righttoinformation.wiki/tools/ai-rti-draft-app.html|AI RTI Drafter]] helps you frame a sharp application. You can also track your reply deadlines with the [[https://righttoinformation.wiki/tools/timeline-calculator-app.html|Timeline Tracker]].
+===== FAQ =====
+==== Do fixed-term employees really get gratuity after one year? ====
+Yes. Section 53 of the Code on Social Security, 2020 entitles a fixed-term employee to gratuity on a pro-rata basis after completing one year of continuous service. The five-year wait does not apply to them.
+==== When did this one-year gratuity rule start? ====
+The rule started when the Code on Social Security, 2020 came into force on 21 November 2025. The Code consolidates several older laws, including the Payment of Gratuity Act, 1972.
+==== How is fixed-term gratuity calculated? ====
+The formula is 15 divided by 26, multiplied by last drawn wages, multiplied by years of service, the same as for permanent staff. For fixed-term workers it is computed pro-rata for the actual period worked, including any part-year.
+==== Do permanent employees still need five years for gratuity? ====
+Yes. Regular and permanent employees still need five years of continuous service. The reduced one-year threshold applies only to fixed-term employees. The death and disablement exceptions continue for everyone.
+==== What can I do if my employer does not pay gratuity? ====
+First apply in writing using Form I. If the employer delays beyond 30 days, you can claim simple interest. If the amount is still disputed or unpaid, apply to the competent controlling authority, which can direct payment after hearing both sides.
+==== Is gratuity taxable for fixed-term employees? ====
+Gratuity received by an employee enjoys a tax exemption up to a notified limit, with any excess being taxable. Because the exact cap can change by notification, confirm the current figure with the Income Tax Department before you file your return.
+===== Download checklist and next steps =====
+**Your gratuity claim checklist**
+  - Confirm you are on a fixed-term contract and have completed one year.
+  - Note your last drawn wages and exact years of service.
+  - Calculate the amount: 15/26 x wages x years.
+  - Submit Form I to your employer in writing and keep a copy.
+  - Track the 30-day payment window; claim interest if it is missed.
+  - If unpaid, approach the competent controlling authority.
+**Next steps:** If your gratuity is stuck because of a related provident fund issue, see [[https://righttoinformation.wiki/pf-withdrawal-claim-rejected-without-reason-epfo-india|what to do when your PF claim is rejected without reason]]. Keep every contract, payslip and letter safe, since they are the proof your claim rests on.
+//Reviewed for accuracy by Dr. Shrawan Kumar Pathak.//
+**Related guide:** [[https://righttoinformation.wiki/gratuity-payable-on-resignation-pension-forfeited-2025|Gratuity on resignation but pension forfeited: SC 2025]]
+===== Gratuity for fixed-term employees: One year service, no five-year wait (2026) =====
+Gratuity for fixed-term employees — complete guide on the one-year eligibility rule and how to claim:
+  - **Step 1: The new gratuity rule for fixed-term employees.** (a) the central government amended the Payment of Gratuity Act, 1972 — through the Payment of Gratuity (Amendment) Act, 2018 — and the subsequent notifications — to provide that: (i) fixed-term employees are eligible for gratuity — on completion of one year of service — instead of the five-year requirement — that applies to regular employees, (ii) the gratuity is payable — on the same terms — as regular employees — including the 15 days' wages for every completed year of service — or part thereof — in excess of six months, (iii) the fixed-term employee gets the gratuity — at the end of the fixed-term contract — or on termination — or on resignation — whichever is earlier, (b) the amendment was introduced — to encourage the employers — to hire fixed-term employees — with the same benefits — as regular employees — and to reduce the contract labour — and the exploitation.
+  - **Step 2: Who is a fixed-term employee?** (a) a fixed-term employee is an employee — who is hired for a fixed period — specified in the contract — and the employment ends — automatically — at the end of the period — without the need for termination — or notice, (b) the fixed-term employee is different from: (i) a regular employee (who is hired on a permanent basis — with no fixed end date), (ii) a contract labour (who is hired through a contractor — and is not a direct employee of the company), (iii) a casual employee (who is hired on a daily or weekly basis — with no fixed contract), (c) the fixed-term employee is entitled to: (i) the same wages — as regular employees — for the same work, (ii) the same benefits — including PF, ESI, bonus, and gratuity, (iii) the same working conditions — including hours, leave, and safety, (d) the employer must: (i) issue a fixed-term contract — in writing — with the start date — and the end date — and the terms, (ii) pay the gratuity — on the completion of one year — or the end of the contract — whichever is earlier, (iii) not convert the fixed-term contract — into a regular contract — without the employee's consent.
+  - **Step 3: How gratuity is calculated for fixed-term employees.** (a) the gratuity calculation — for fixed-term employees — is the same — as regular employees: (i) gratuity = (last drawn wages x 15 days x number of years of service) / 26, (ii) the "last drawn wages" = basic + dearness allowance, (iii) the "15 days" = 15 days' wages for every completed year, (iv) the "26" = the working days in a month (as per the Act), (b) example: a fixed-term employee — with a last drawn wage of Rs 30,000 — and 2 years of service — gets: gratuity = (30,000 x 15 x 2) / 26 = Rs 34,615, (c) the maximum gratuity — under the Act — is Rs 20 lakh (as amended in 2018 — increased from Rs 10 lakh) — but the employer can pay more — voluntarily, (d) the gratuity is payable: (i) on the end of the fixed-term contract, (ii) on termination — by the employer — before the end of the contract, (iii) on resignation — by the employee — before the end of the contract, (iv) on death or disablement — of the employee.
+  - **Step 4: How to claim gratuity as a fixed-term employee.** (a) Step 1 — fill Form I (the employee fills Form I — the gratuity claim form — with the details: name, address, employer, service period, wages, and the bank details), (b) Step 2 — submit to the employer (the employee submits Form I — to the employer — within 30 days — of the end of the contract — or the termination — or the resignation), (c) Step 3 — employer processes (the employer processes the claim — within 15 days — of receiving Form I — and pays the gratuity — by cheque — or bank transfer), (d) Step 4 — if the employer delays (if the employer does not pay — within 30 days — the employee can file a complaint — with the Labour Commissioner — under Section 8 of the Payment of Gratuity Act), (e) Step 5 — if the employer refuses (if the employer refuses — to pay the gratuity — the employee can file a claim — with the Labour Commissioner — who can issue a certificate — for the recovery — and the collector can recover — as land revenue).
+  - **Step 5: Common issues and solutions.** (a) employer denies fixed-term status: the employer claims that the employee was a contract labour — not a fixed-term employee — and denies gratuity — solution: (i) produce the fixed-term contract — in writing, (ii) show the appointment letter — and the terms, (iii) file a claim with the Labour Commissioner, (b) employer denies one-year eligibility: the employer claims that the five-year rule applies — and the employee has not completed five years — solution: (i) cite the amendment — and the notification — that provides for one-year eligibility — for fixed-term employees, (ii) file a claim with the Labour Commissioner — with the notification, (c) employer pays gratuity only on completion: the employer pays the gratuity — only at the end of the contract — and not on resignation — or termination — solution: (i) cite the Act — which provides for gratuity — on resignation — or termination — or end of contract — whichever is earlier, (ii) file a claim with the Labour Commissioner, (d) employer calculates gratuity on basic only: the employer calculates the gratuity — on the basic — and not on the basic + DA — solution: (i) cite the Act — which defines "wages" as basic + DA, (ii) file a claim with the Labour Commissioner — with the salary slip.
+  - **Step 6: File RTI on gratuity for fixed-term employees.** File RTI with the Labour Commissioner (or the Ministry of Labour and Employment) asking for: (a) the notification: "Provide the notification — on gratuity for fixed-term employees — including: (i) the notification number, (ii) the date, (iii) the eligibility — one year or five years, (iv) the calculation method", (b) the complaints: "Provide the complaints received — against [employer name] — for non-payment of gratuity — to fixed-term employees — and the action taken — and the status", (c) the inspections: "Provide the inspection reports — of [employer name] — under the Payment of Gratuity Act — including: (i) the date of inspection, (ii) the findings, (iii) the gratuity paid — or pending, (iv) the action taken", (d) the claims: "Provide the status of gratuity claim — filed by [employee name] — against [employer name] — and the order — and the recovery — and the status".
+  - **Step 7: Practical tips.** (a) keep the contract (keep the fixed-term contract — and the appointment letter — safely — because they are the proof — of the fixed-term status), (b) file Form I promptly (file Form I — within 30 days — of the end of the contract — or the resignation — to avoid delays), (c) cite the amendment (if the employer denies the one-year eligibility — cite the amendment — and the notification — and the Labour Commissioner — can enforce), (d) file RTI (if the employer refuses — or the Labour Commissioner delays — file RTI — to get the notification — and the complaint status — and to build the case), (e) Example: A fixed-term employee — with 2 years of service — was denied gratuity — by the employer — who claimed the five-year rule — the employee filed a claim with the Labour Commissioner — and cited the amendment — and the notification — the Labour Commissioner ordered the employer to pay — Rs 34,615 — as gratuity — and the employer paid — within 15 days.
+See [[https://righttoinformation.wiki/gratuity-fixed-term-employees-one-year-no-five-year-wait|Gratuity Fixed-Term]] and [[https://righttoinformation.wiki/guide/find-pio-2026|Find PIO]].
+{{tag>gratuity fixed term employees one year five year payment of gratuity act amendment 2018 labour commissioner form i rti 2026}}