The government’s new labour law framework—effective 21 November—has introduced several employee-friendly reforms. One of the biggest changes relates to gratuity, a financial reward given by employers for long-term service. Here's a clear breakdown of what’s new and how much gratuity an employee might receive based on different CTC slabs.
1. What Exactly Is Gratuity? — A Simple Explanation
Gratuity is a thank-you payment from the employer to the employee for completing 5+ years of continuous service.
It is calculated on the basis of:
Last drawn basic salary × (15/26) × Number of completed years of service
Under the new labour codes, the Basic + Dearness Allowance (DA) portion is expected to rise (to around 50% of CTC), making gratuity higher for many employees.
2. What Changed Under the New Labour Law?
Here are the gratuity-related updates:
· Basic pay component increases → leads to higher gratuity payouts.
· More clarity on fixed-term employees → they become eligible for gratuity sooner.
· Better transparency in how gratuity is computed.
These changes mean that employees will likely get more gratuity than earlier.
3. How Gratuity Is Calculated: Quick Formula
Gratuity = (Basic Salary × 15/26) × Years of Service
Why 15/26?
Because the law considers 15 days of salary for every year of service, and 26 is the number of workdays in a month.
4. Gratuity for Someone Earning ₹6 Lakh CTC
Estimated Basic (50% of CTC): ₹3,00,000/year → ₹25,000/month
Years of Service
Approx. Gratuity
5 years
₹72,115
10 years
₹1.44 lakh
15 years
₹2.16 lakh
Employees in this bracket will benefit the most, as earlier their basic was often only 30–40% of CTC.
5. Gratuity for Someone Earning ₹12 Lakh CTC
Estimated Basic: ₹6,00,000/year → ₹50,000/month
Years of Service
Approx. Gratuity
5 years
₹1.44 lakh
10 years
₹2.88 lakh
15 years
₹4.32 lakh
With the Basic component rising to 50%, gratuity for mid-income employees increases significantly.
6. Gratuity for Someone Earning ₹24 Lakh CTC
Estimated Basic: ₹12,00,000/year → ₹1,00,000/month
Years of Service
Approx. Gratuity
5 years
₹2.88 lakh
10 years
₹5.77 lakh
15 years
₹8.65 lakh
Higher salaries mean a larger Basic, resulting in substantial gratuity payouts after long-term service.
7. Why the New Rules Are Good for Employees
· Higher retirement benefits
· Stronger long-term financial security
· More uniform salary structure
· Encourages employees to stay longer with companies
8. Final Takeaway: The Higher the Basic, the Higher the Gratuity
The new labour code’s structure—especially the rule that Basic must be at least 50% of total pay—directly boosts gratuity.
If your CTC is ₹6 lakh, ₹12 lakh, or ₹24 lakh, your gratuity amount could now be 10–30% higher than what you would have received earlier.
Disclaimer:
The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of any agency, organization, employer, or company. All information provided is for general informational purposes only. While every effort has been made to ensure accuracy, we make no representations or warranties of any kind, express or implied, about the completeness, reliability, or suitability of the information contained herein. Readers are advised to verify facts and seek professional advice where necessary. Any reliance placed on such information is strictly at the reader’s own risk..jpg)
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