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Employment Rights — Gratuity, Maternity Benefit, and Notice Period
The essentials every private-sector employee in India should know: when you qualify for gratuity, how it's calculated, your maternity leave entitlements under the new labour codes, and what your employer can and cannot do at termination.
Governing law: Payment of Gratuity Act, 1972; Maternity Benefit Act, 1961 (now under Code on Social Security, 2020); Industrial Disputes Act, 1947
India's core employment protections come from a mix of central acts and, since November 2025, the four consolidated Labour Codes. Two entitlements matter for almost every private-sector employee: (1) Gratuity — a mandatory statutory payment at the end of employment, provided you've completed 5 years of continuous service (with some exceptions), calculated as 15 days' wages for every completed year of service, capped at Rs. 20 lakh. (2) Maternity Benefit — 26 weeks of paid leave for the first two children (12 weeks for the third onwards or for adoption/surrogacy), for women who have worked at least 80 days in the 12 months preceding the expected delivery date. Both entitlements apply irrespective of whether you're on the "permanent" rolls or a fixed-term/contract employee, as long as you meet the service thresholds.
Frequently Asked Questions
When am I entitled to gratuity, and how is it calculated?
You are entitled to gratuity on termination of employment (by retirement, resignation, death, or disablement) if you have completed at least 5 years of continuous service with the same employer. The 5-year requirement is waived in cases of death or disablement. Calculation formula: (Last drawn basic salary + DA) × 15/26 × number of completed years of service. For example, on Rs. 60,000/month basic+DA and 12 years of service: 60,000 × 15/26 × 12 = approximately Rs. 4,15,385. The statutory maximum is Rs. 20 lakh (tax-free). Employers are LEGALLY REQUIRED to pay gratuity — non-payment can be recovered by filing a claim with the Controlling Authority under the Act, and delay attracts simple interest.
Source: Payment of Gratuity Act, 1972, Sections 4 and 7
How much maternity leave am I entitled to?
For your first or second child: 26 weeks of fully paid leave, up to 8 weeks of which may be taken before the expected date of delivery. For a third child or beyond: 12 weeks, up to 6 weeks pre-natal. For adoption of a child below 3 months or as a commissioning mother in surrogacy: 12 weeks from the date the child is handed over. A March 2026 Supreme Court ruling removed the earlier 3-month age cap for adoption in certain contexts. Eligibility: at least 80 working days with the employer in the 12 months immediately preceding your expected delivery date. Applies to all employees (permanent, temporary, contractual) in establishments with 10 or more employees. Your employer CANNOT terminate you during pregnancy or maternity leave — doing so is criminally punishable under the Act.
Source: Maternity Benefit Act, 1961 (as amended 2017); Code on Social Security, 2020
Can my employer force me to serve notice period if I resign?
It depends on your employment contract. Notice period is a contractual obligation — the length is what your appointment letter says, commonly 30, 60, or 90 days. If you leave before serving it, the employer can recover an equivalent amount from your dues (a "salary in lieu of notice"), but they generally CANNOT physically prevent you from leaving or withhold your relieving letter permanently — the Constitution guarantees the right to livelihood and freedom to practise any profession. If the employer refuses to accept your resignation or issue a Full-and-Final settlement / relieving letter, you can file a complaint with the Labour Commissioner or approach the civil court. In practice, negotiating a shorter notice at exit is common — most companies accept payment for the unserved portion.
Source: Indian Contract Act 1872; Constitution Article 19(1)(g)
What if my employer terminates me without notice or reason?
For "workmen" under the Industrial Disputes Act, 1947 (broadly, employees other than managerial/supervisory), retrenchment (termination for reasons other than misconduct) requires: one month's written notice (or salary in lieu), one month's wages notice compensation, retrenchment compensation equal to 15 days' average pay for every completed year of service, and reasons in writing. For establishments with 100+ employees, prior permission of the government is required for retrenchment. For non-workman managerial employees, protections come from the appointment letter and general contract law — wrongful termination allows a civil suit for damages. Under the Industrial Disputes Act, an aggrieved workman can raise a dispute for reinstatement with the Labour Commissioner.
Source: Industrial Disputes Act 1947, Sections 25F, 25N
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