India’s four new Labour Codes are effective. Understand the New Labour Codes 2025 Gratuity and Minimum Wage Rules, including eligibility after just one year for fixed-term employees, mandatory social security for gig workers, and the revised overtime pay calculations.
New Labour Codes 2025 Gratuity
The Indian government has finally enacted the four unified Labour Codes, marking the most significant overhaul of the nation’s workplace laws since Independence. By consolidating 29 fragmented and often outdated central acts, these codes—namely, the Code on Wages (2019), the Industrial Relations Code (2020), the Code on Social Security (2020), and the OSHWC Code (2020)—aim to balance two critical national objectives: ensuring ease of doing business for employers and strengthening the social security net for workers. This decisive move is set to impact nearly 500 million members of the Indian workforce.
The Code on Wages, 2019, introduces provisions that immediately address a worker’s core financial well-being. For the first time, a statutory right to Universal Minimum Wages is guaranteed to all employees, spanning both the organised and unorganised sectors. Previously, over 60% of workers were left unprotected outside of scheduled employments. This code mandates the implementation of a national floor wage, establishing a minimum economic standard below which no state government can set its local minimum wages, thus ensuring a baseline level of sustenance and financial stability across the country.
One of the most significant changes, and a key focus of the New Labour Codes 2025 Gratuity and Minimum Wage Rules, revolves around gratuity eligibility for fixed-term employees (FTEs). Under the new rules, FTEs—who are employed on a time-bound contract, a common hiring practice in the modern IT and startup ecosystem—are now eligible for gratuity payment after completing just one year of continuous service, a dramatic reduction from the earlier five-year requirement.
