India has ushered in a new era of labour reforms with four comprehensive labour codes becoming effective on November 21, bringing significant changes to the country's employment landscape. These codes rationalize 29 existing labour laws and introduce several progressive measures aimed at strengthening worker rights and formalizing the job market.
Revolutionary Gratuity Provision
One of the most groundbreaking changes introduced in the labour reforms is the provision for early gratuity. Employees will now become eligible for gratuity after completing just one year of continuous service, a dramatic reduction from the previous requirement of five years of continuous service.
This significant shift in gratuity entitlement marks a substantial improvement in social security benefits for millions of workers across India. The move is expected to provide financial security to employees who previously had to wait much longer to access their gratuity benefits.
Fixed Term Employment Benefits
The new gratuity entitlement after one year of service specifically applies to fixed term employment (FTE) arrangements. This targeted approach ensures that workers in temporary or project-based roles receive comparable benefits to their permanent counterparts.
Beyond gratuity, fixed term employment guarantees several other crucial benefits for workers. FTE workers will receive leave benefits, regulated working hours, and comprehensive medical benefits, bringing them at par with permanent employees in terms of workplace rights and protections.
The labour codes explicitly state that fixed term employment will facilitate the migration of contractual employment into the permanent employment structure, rather than converting permanent jobs into FTE arrangements. This ensures job security while maintaining flexibility in the employment market.
Equal Pay and Social Security
In a significant move toward pay parity, workers under fixed term employment will receive the same wages as permanent employees. This compensation can be higher than minimum wages and is expected to substantially raise income opportunities for contractual workers.
The labour reforms also mandate that principal employers must provide health benefits and social security coverage to contract workers. Additionally, workers will receive free annual health check-ups, promoting preventive healthcare measures among the workforce.
The comprehensive labour codes extend coverage to multiple categories of workers beyond fixed term employees. These include gig workers, contract workers, women workers, youth workers, MSME workers, beedi and cigar workers, plantation workers, digital media workers, mine workers, hazardous industry workers, textile workers, IT workers, dock workers, and export sector workers.
These reforms represent a significant step forward in formalizing India's employment sector and expanding social security net to previously underserved worker categories. The changes are expected to create a more equitable and secure working environment while supporting economic growth through structured employment practices.
