In a landmark overhaul of India’s labour framework, the Modi government has introduced sweeping reforms, including a major change to gratuity eligibility, new wage protection rules, and uniform labour standards across sectors.
The reforms aim to boost worker protection, modernise employment laws, and bring India’s labour market in line with global practices.
One of the most impactful provisions is the proposal to make employees eligible for gratuity after just one year of continuous service, a drastic reduction from the current five-year requirement.
1-Year Gratuity: A Historic Shift for Indian Workers
Under the new proposal, employees who complete one year of service will qualify for gratuity benefits.
Why this matters:
Helps contractual, gig, platform, and short-tenure employees
Provides income security for workers in high-turnover sectors
Encourages employers to retain staff
Aligns with global best practices on worker benefits
This change significantly widens the safety net for millions of workers who previously left jobs before completing five years and therefore received no gratuity.
New Wage Rules: More Clarity & Fairness
The labour reforms also introduce:
✔ A national floor wage
To prevent exploitation and uneven wage structures across states.
✔ Transparent salary components
Standardised definitions of basic pay, allowances, overtime, and deductions.
✔ Better protection for informal and unorganised workers
Including platform workers, gig workers, and delivery partners.
The goal is to ensure fair wages, predictable earnings, and reduced disputes between employers and employees.
Stronger Social Security for Gig & Platform Workers
For the first time, India’s labour codes formally recognise:
Gig workers
Platform workers
Contractual labour
Aggregator-based workers (delivery, ride-hailing, domestic help)
Social security measures include:
Insurance
Pension benefits
Gratuity eligibility
Maternity and disability protection
This is a major step toward building an inclusive labour ecosystem for India’s fast-growing digital workforce.
Uniform Labour Codes for All Sectors
The Modi government aims to consolidate 29 separate labour laws into 4 labour codes, covering:
Wages
Social Security
Occupational Safety & Health
Industrial Relations
Benefits of this simplification:
Easier compliance
More transparency
Faster dispute resolution
Reduced red tape for businesses
Clearer worker rights
This is expected to improve India’s Ease of Doing Business ranking and boost investment.
How the Reforms Benefit Workers
✔ More job stability
Better wages, insurance, and statutory benefits.
✔ Faster gratuity access
Massive relief for employees with short job cycles.
✔ Enhanced safety standards
Especially in factories, construction, and hazardous industries.
✔ Improved social protection
Covering millions of unorganised workers.
How Employers Are Affected
✔ Higher compliance responsibility
Clear documentation and transparency required.
✔ Increased costs for some industries
Due to gratuity expansion and wage standardisation.
✔ Simplified regulations
Less paperwork and more digital compliance mechanisms.
Overall, experts say the reforms create long-term stability, despite short-term adjustments for companies.
Why These Reforms Matter Now
The labour reforms come at a time when India is:
Expanding manufacturing capacity
Seeing rapid gig economy growth
Formalising its workforce
Competing globally for investment
Improving digital labour platforms
Ensuring worker rights while promoting business-friendly policies will help India support sustainable economic growth.
❓ FAQs
1. What is the new gratuity rule?
Employees can become eligible for gratuity after one year of continuous service.
2. Who benefits the most?
Gig workers, contractual employees, start-up workers, and those with frequent job changes.
3. What are the new wage rules?
A national floor wage, uniform salary definitions, and stronger worker protections.
4. Are gig workers included in these reforms?
Yes, gig and platform workers get social security benefits under the revised labour codes.
5. Will employer costs increase?
Some industries may see higher costs due to expanded gratuity and compliance requirements.
Published on : 22nd November
Published by : SMITA
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