Instagram<\/a><\/p>\n\n\n\nThis article is for general information and is not legal advice. Notified rules and thresholds may change, so verify current provisions before acting.<\/em><\/p>\n\n\n\n<\/span>FAQs<\/span><\/h3>\n\n\n\n1. Is gratuity payable by a foreign company’s Indian subsidiary?<\/strong>
Yes. The Indian subsidiary is a separate legal entity and the statutory employer. If it meets the applicable employee threshold under the Code on Social Security, 2020, it must provide gratuity to eligible employees regardless of the foreign parent’s own policies.<\/p>\n\n\n\n2. How is gratuity calculated after the 2026 Labour Code changes?<\/strong>
Gratuity equals last drawn wages multiplied by 15\/26 and by completed years of service. Under the Code, “wages” generally includes basic pay, dearness allowance and retaining allowance, with excluded components capped at 50% of total remuneration.<\/p>\n\n\n\n3. Are fixed-term employees entitled to gratuity?<\/strong>
Yes. Under the Code on Social Security, fixed-term employees become eligible for pro-rata gratuity after completing one year of continuous service, instead of the usual five-year requirement. Employers should budget for this in contract and project-based hiring.<\/p>\n\n\n\n4. Does service with a group company count when an employee transfers?<\/strong>
Not automatically. Service continuity depends on the transfer terms, consent and the legal structure. Employers should record in writing whether prior service is recognised and which entity bears the accrued gratuity liability.<\/p>\n\n\n\n5. Can an NRI or expatriate employee receive gratuity abroad?<\/strong>
Gratuity is payable in India on exit. Remittance abroad is possible through authorised banking channels, subject to tax deduction and FEMA documentation. Employers should maintain service records, nominations and payment proof for audit.<\/p>\n","protected":false},"excerpt":{"rendered":"Managing gratuity liability for a foreign subsidiary has become more complex since India’s four Labour Codes took effect on 21 November 2025. Gratuity now sits under the Code on Social Security, 2020, and the rules have changed for fixed-term staff, wage definitions and transferred employees. This matters to foreign parent companies hiring in India, MNCs […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[812],"tags":[4617,4613,4621,4620,4612,4611,4616,4619,4614,4618,4615],"class_list":["post-9712","post","type-post","status-publish","format-standard","hentry","category-blog","tag-15-26-gratuity-formula","tag-code-on-social-security-2020-gratuity","tag-continuity-of-service-gratuity","tag-employee-transfer-gratuity-india","tag-gratuity-calculation-india","tag-gratuity-eligibility-india","tag-gratuity-for-fixed-term-employees","tag-gratuity-for-mnc-employees","tag-gratuity-under-labour-code-2026","tag-indian-subsidiary-of-foreign-company-compliance","tag-tuity-liability-foreign-subsidiary"],"_links":{"self":[{"href":"https:\/\/startupsolicitors.com\/blog\/wp-json\/wp\/v2\/posts\/9712","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/startupsolicitors.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/startupsolicitors.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/startupsolicitors.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/startupsolicitors.com\/blog\/wp-json\/wp\/v2\/comments?post=9712"}],"version-history":[{"count":1,"href":"https:\/\/startupsolicitors.com\/blog\/wp-json\/wp\/v2\/posts\/9712\/revisions"}],"predecessor-version":[{"id":9714,"href":"https:\/\/startupsolicitors.com\/blog\/wp-json\/wp\/v2\/posts\/9712\/revisions\/9714"}],"wp:attachment":[{"href":"https:\/\/startupsolicitors.com\/blog\/wp-json\/wp\/v2\/media?parent=9712"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/startupsolicitors.com\/blog\/wp-json\/wp\/v2\/categories?post=9712"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/startupsolicitors.com\/blog\/wp-json\/wp\/v2\/tags?post=9712"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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