FAQ’s on New Labour Codes

1.When Will the Labour Codes Come into Effect?

All four codes will be effective from November 21, 2025.

2. Is Gratuity Part of CTC?

Gratuity is not included in the CTC. It is calculated based on an employee’s last-drawn basic pay, Dearness Allowance (DA), and years of service. However, since basic pay is part of CTC, a higher basic pay increases the gratuity amount at the time of exit.

3.Benefits for Fixed-Term Employees (FTEs):

Under the new labour codes, fixed-term employees receive benefits on par with permanent workers, including:

• Leave and medical coverage
• Social security benefits
• Gratuity eligibility after 1 year of service instead of five
• Equal wages to permanent staff

4. Who Are Fixed-Term Employees?

Fixed-term employees are those engaged through a written contract for a specific duration. They must be treated equally to permanent employees regarding working hours, wages, allowances, and benefits for similar work. Benefits are proportionate to their period of service, even if it is below the usual qualifying threshold. Under the Industrial Relations Code, 2020, fixed-term employees are eligible for gratuity after completing one year of service. Essentially, anyone employed for a predetermined, limited period under a contract falls under the definition of a fixed-term employee.