contact page<\/a>.<\/p>\n\n\n\nThis article is for general information and is not legal advice. Verify current notifications with the Ministry of Labour and Employment before acting.<\/em><\/p>\n\n\n\n
\n\n\n\n<\/span>3. FAQs<\/span><\/h2>\n\n\n\nQ1. Is gratuity payable to fixed-term employees in India?<\/strong>
Yes. Under the Code on Social Security, 2020, fixed-term employees are entitled to gratuity on a pro-rata basis after completing one year of service. The amount depends on last drawn wages and completed years of service under the contract.<\/p>\n\n\n\nQ2. How is gratuity calculated for fixed-term employees?<\/strong>
Gratuity equals last drawn monthly wages (basic plus dearness allowance) multiplied by 15, divided by 26, multiplied by completed years of service. For example, \u20b980,000 wages and two years of service gives \u20b992,307.69.<\/p>\n\n\n\nQ3. Does this rule apply to foreign subsidiaries in India?<\/strong>
Yes. An Indian subsidiary is a domestic legal entity and must follow Indian labour codes. Parent-company policies or overseas contracts do not replace statutory gratuity obligations for employees working in India.<\/p>\n\n\n\nQ4. Can an NRI-owned company avoid gratuity on short contracts?<\/strong>
No. The NRI status of the owner does not change employer obligations. If the Indian establishment is covered under the Code, eligible fixed-term employees must receive gratuity after one year of service.<\/p>\n\n\n\nQ5. What is the gratuity tax exemption limit?<\/strong>
Gratuity received by eligible employees is exempt from income tax up to \u20b920 lakh, subject to applicable income-tax provisions. Amounts above the limit are taxable. Check current rules on the Income Tax Department website.<\/p>\n","protected":false},"excerpt":{"rendered":"Fixed-Term Employment Contracts : Can a foreign subsidiary hire staff on short contracts in India without paying gratuity? Until recently, the answer was usually yes. The Payment of Gratuity Act, 1972 required five years of continuous service, so contract staff almost never qualified. That has changed. Fixed-term employment contracts now carry a pro-rata gratuity entitlement […]<\/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":[4700,745,801,4807,4812,4811,4808,4810,4616,4813,4809,4734,4603,4698],"class_list":["post-9765","post","type-post","status-publish","format-standard","hentry","category-blog","tag-code-on-social-security-2020","tag-company-formation-in-india","tag-company-setup-in-india","tag-fixed-term-employment-contracts","tag-fixed-term-worker-rights-india","tag-foreign-subsidiary-employment-india","tag-gratuity-after-one-year-india","tag-gratuity-calculation-formula-india","tag-gratuity-for-fixed-term-employees","tag-gratuity-tax-exemption-20-lakh","tag-hiring-employees-in-india-for-foreign-companies","tag-india-subsidiary-compliance","tag-labour-codes-india-2026","tag-payroll-compliance-india"],"_links":{"self":[{"href":"https:\/\/startupsolicitors.com\/blog\/wp-json\/wp\/v2\/posts\/9765","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=9765"}],"version-history":[{"count":1,"href":"https:\/\/startupsolicitors.com\/blog\/wp-json\/wp\/v2\/posts\/9765\/revisions"}],"predecessor-version":[{"id":9767,"href":"https:\/\/startupsolicitors.com\/blog\/wp-json\/wp\/v2\/posts\/9765\/revisions\/9767"}],"wp:attachment":[{"href":"https:\/\/startupsolicitors.com\/blog\/wp-json\/wp\/v2\/media?parent=9765"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/startupsolicitors.com\/blog\/wp-json\/wp\/v2\/categories?post=9765"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/startupsolicitors.com\/blog\/wp-json\/wp\/v2\/tags?post=9765"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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