If you work in a private job and are planning to switch companies, gratuity is an important factor to consider. One of the biggest questions employees often have is whether the notice period is counted as part of service.
With the new labor code, this has become much clearer. Understanding this properly can help you save or gain thousands or even lakhs of rupees.
Key Points You Should Know
Here are the main things to understand:
Notice period usually counts as service if you are still on the company’s payroll.
This can help you meet the minimum eligibility requirement of 1 year in some cases.
Fixed-term employees can now get gratuity after 1 year of service.
If your basic salary increases, your gratuity amount will also increase.
Preferred source: Zee Business
Why This Rule Is So Important
Gratuity is basically a reward for your loyalty and service to the company.
Under the new rules, if you have not completed the required service period, you may not receive gratuity. However, if the notice period is added to your total service, you may become eligible.
This means that even a 2 to 3 month notice period can make a huge difference and may help you receive lakhs of rupees.
For example, if you are close to completing the required tenure, adding the notice period can help you qualify.
Also, gratuity can now be paid after 1 year instead of 5 years for fixed-term employees. For someone earning ₹50,000, the annual gratuity amount could be around ₹28,847, effective from April 1.
Will the Notice Period Be Counted as Service?
Yes, in most cases it will count
Your notice period will generally be considered part of your service if:
you are still on the company’s payroll
you are receiving salary
your PF is still being deducted
This simply means that you are still officially an employee of the company.
In simple words:
You are still employed
The company is paying your salary
Your employment status is active in the system
So, this period will be added to your total job tenure.
Does This Apply in Every Case?
Not always — some conditions apply
This benefit will be available only if:
your notice period is treated as working tenure
the company has accepted your resignation
your Full & Final Settlement (F&F) is completed within 2 working days
According to Section 17(2) of the Code on Wages, full payment must be made within 2 working days of the last working day.
This rule applies to:
employees who resign
employees who are terminated
retrenchment cases
The same rules apply to all.
What Happens If There Is a Delay?
If you do not receive your money within 2 working days, it is considered a legal violation.
In such a case:
you can file a complaint with the Labour Department
you also have the right to demand interest on delayed payment
Gratuity itself should be paid within 30 days after leaving the job.
Major Change in Gratuity Rules
A big change has been made for fixed-term employees.
Earlier:
5 years of service was required
Now:
gratuity can be received even after 1 year of service
This is a major relief for employees working on contract or fixed-term jobs.
Impact on Salary Structure
Under the new rules:
Basic Salary = at least 50% of CTC
Since gratuity is calculated on the basic salary, any increase in the basic pay will automatically increase the gratuity amount.
So:
higher basic salary = higher gratuity
Important Rules at a Glance
| Issue | What the Rule Says | What You Should Do |
|---|---|---|
| Notice Period | Counts as service if on payroll | Complete the notice period |
| Gratuity Eligibility | 5 years (in some cases 4 years 240 days) | Plan timing carefully |
| Fixed-Term Employees | Eligible in 1 year | Use contract benefits wisely |
| Basic Salary | Must be 50% of CTC | Understand your salary structure |
| Payment Time | F&F in 2 days, gratuity in 30 days | Complain if delayed |
| Advantage | Notice period can help eligibility | Do not rush resignation |
When Will You Get the Money?
According to the new rules:
Full & Final Settlement – within 2 working days
Gratuity – within 30 days after leaving the company
Important points:
gratuity after 5 years of service
(in some cases 4 years and 240 days may also be considered)
notice period is included if you remain on payroll
fixed-term employees are eligible in 1 year
faster payment provisions are now in place
What Should You Do Before Changing Jobs?
If you are planning to switch jobs:
complete the full notice period
check your joining date and last working day
keep your relieving letter safe
confirm gratuity calculation with HR
if the company refuses payment, complain to the Labour Commissioner
Why Proper Planning Matters
If you are close to 4.5 to 5 years of service, every single day matters.
In such cases, the notice period can be a game changer.
| Situation | Impact |
|---|---|
| Around 4.5–5 years | Notice period can help you qualify |
| Notice not completed | Possible loss of gratuity |
| Proper planning | Big financial benefit |
In simple words:
little patience = big money
Earlier, many people ignored the notice period.
Now, it has become one of the most important parts of job switching strategy.
