In short: A gratuity PF ESIC claim India can be made after resignation or layoff if you meet the eligibility thresholds — five years of service for gratuity, contribution-based rules for PF, and wage-based coverage for ESIC. India’s four Labour Codes, effective 21 November 2025, have changed key definitions and extended some benefits.
Key points
- Gratuity requires at least five continuous years of service in most cases, but this threshold is waived entirely if your employment ends due to death or disablement — and layoff periods count toward your continuous service total.
- From 21 November 2025, fixed-term employees can claim gratuity on a pro-rata basis after completing just one year of continuous service, a significant expansion of eligibility.
- The Code on Social Security, 2020 (notified via S.O. 5319(E)) came into force on 21 November 2025 alongside the other three Labour Codes, reshaping how wages, gratuity, and social security contributions are calculated.
- The uniform wage definition under the Code on Wages, 2019 requires that “wages” form at least 50% of total CTC, which directly raises the salary base used to calculate your gratuity.
- The maximum tax-free gratuity for private sector employees is currently ₹20 lakh; for central government employees it was raised to ₹25 lakh in January 2024 and is fully tax-free.
- Employers must pay gratuity within 30 days of it becoming due; delayed payment attracts interest liability under the law.
Gratuity after resignation or layoff: what you need to know
Who qualifies?
Gratuity is governed by the Payment of Gratuity Act, 1972, and applies to employers with 10 or more employees. Under Section 4(1) of that Act, gratuity is payable when your employment ends — whether by superannuation, retirement, resignation, death, or disablement from accident or disease — provided you have completed at least five years of continuous service.
The five-year rule is waived when termination is caused by death or disablement, reflecting the humanitarian intent of the law. If you have been laid off, those layoff periods count as part of your continuous service under the Act’s definition of “continuous service.”
What counts as “continuous service”?
The Act defines continuous service to include periods interrupted by sickness, accident, authorized leave, unauthorized absence, layoff, strike, lockout, or any work stoppage not caused by the employee. For non-underground work, you are deemed to have worked for a year if you have put in 240 working days within that year.
This means a layoff does not automatically break your service record. If you are laid off and later dismissed or resign, the layoff period is counted toward the five-year threshold.
How is gratuity calculated?
Under the Code on Social Security, 2020, the formula is:
Gratuity = (Last Drawn Wages × 15 × Completed Years of Service) ÷ 26
“Wages” under the new codes means basic pay plus dearness allowance (DA) plus any retaining allowance. Crucially, the Code on Wages, 2019 requires this wage component to be at least 50% of your total CTC. If your employer has been keeping your basic low to reduce gratuity liability, this rule corrects that.
| Aspect | Position before 21 Nov 2025 | Position from 21 Nov 2025 |
|---|---|---|
| Governing law | Payment of Gratuity Act, 1972 | Code on Social Security, 2020 (read with Payment of Gratuity Act, 1972) |
| Fixed-term employee eligibility | Not explicitly covered; required five years | Eligible on pro-rata basis after one year of continuous service |
| Wage definition for calculation | Basic pay + DA + retaining allowance | Same components, but wages must be at least 50% of total CTC |
| Private sector ceiling | ₹20 lakh (since 2018) | ₹20 lakh (unchanged) |
| Central government ceiling | Varied; raised to ₹25 lakh in Jan 2024 | ₹25 lakh, fully tax-free |
| Payment deadline | 30 days from due date | 30 days from due date (with interest if delayed) |
Can gratuity be forfeited?
The fact sheet confirms that forfeiture is possible under defined circumstances, but the specific conditions were not fully verified. You should check the Payment of Gratuity Act directly — a link is provided in the sources section below — or consult a qualified labour advocate before assuming forfeiture applies to your case.
PF (Provident Fund) claims after resignation or layoff
What happens to your PF when you leave?
Your Employee Provident Fund balance is your money. Both your contributions and your employer’s contributions accumulate in your account throughout your employment. When you resign or are laid off, that balance does not disappear — it remains in your EPFO account and continues to earn interest for a defined period.
You can transfer the balance to your new employer’s PF account when you join another job, or you can withdraw it subject to the rules under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 and the schemes framed under it. The Code on Social Security, 2020, which came into force on 21 November 2025, consolidates the law governing provident funds as part of the broader social security framework.
For detailed steps on withdrawing or transferring your PF balance, the EPFO portal and the text of the Code on Social Security, 2020 on India Code are your primary references. You can also find plain-language walkthroughs in our Law for You guides, which cover employee rights in accessible terms.
ESIC benefits after resignation or layoff
Does ESIC coverage stop the moment you leave?
ESIC — the Employees’ State Insurance Corporation — provides health and cash benefits to workers whose wages fall within the applicable threshold. Coverage is contribution-based: you and your employer make regular contributions, and benefits are linked to those contribution periods.
When your employment ends, your ESIC entitlements do not vanish immediately. Benefits such as medical care and sickness benefits may continue for a defined period after the end of employment, depending on your contribution history. The Code on Social Security, 2020, which consolidated and updated ESIC law from 21 November 2025, governs these entitlements going forward.
Because the precise continuation periods and conditions depend on your contribution record and the specific benefit in question, you should verify your entitlements directly with the ESIC portal or a labour law advisor rather than relying on general summaries.
Who is covered by ESIC?
ESIC applies to factories and other establishments covered under the Employees’ State Insurance Act, 1948 (now consolidated under the Social Security Code) where employees earn wages at or below the applicable ceiling. If your wages exceeded the ceiling, you would not have been enrolled in ESIC and cannot claim ESIC benefits after leaving.
The Labour Codes: what changed on 21 November 2025?
India consolidated its central labour legislation into four codes. The Ministry of Labour and Employment notified the implementation of major provisions of all four codes — the Code on Wages, 2019; the Industrial Relations Code, 2020; the Code on Social Security, 2020; and the Occupational Safety, Health and Working Conditions Code, 2020 — effective 21 November 2025.
For employees making a gratuity PF ESIC claim India, the most immediately relevant changes are the broadened wage definition (50% of CTC floor), the extension of gratuity to fixed-term workers after one year, and the consolidation of PF and ESIC law under the Code on Social Security, 2020. These changes apply prospectively from 21 November 2025.
Frequently asked questions
Can I claim gratuity if I resign before completing five years?
Generally, no. The five-year continuous service threshold applies to resignation. However, if your employment ends due to death or disablement, the five-year requirement is waived entirely. From 21 November 2025, fixed-term employees are an exception: they become eligible for pro-rata gratuity after just one year of continuous service under the Code on Social Security, 2020.
Does a layoff period count toward my five years for gratuity?
Yes. The Payment of Gratuity Act, 1972 defines “continuous service” to include periods of layoff. This means time spent on layoff is not subtracted from your service record when calculating whether you have crossed the five-year threshold for gratuity eligibility.
How long does my employer have to pay my gratuity after I leave?
Your employer is required to pay your gratuity within 30 days from the date it becomes due — that is, your last working day or the date your termination takes effect. If the employer delays beyond 30 days without valid justification, they become liable to pay interest on the outstanding amount. Persistent non-payment can attract penalties under the Act.
Primary sources
- India Code (indiacode.nic.in) — full text of the Payment of Gratuity Act, 1972; the Code on Social Security, 2020; the Code on Wages, 2019; and the Industrial Relations Code, 2020, including the 21 November 2025 commencement notification (S.O. 5319(E)).
- Employees’ Provident Fund Organisation (EPFO) — official portal for PF account management, withdrawal, and transfer claims.
- Employees’ State Insurance Corporation (ESIC) — official portal for ESIC coverage, contribution records, and benefit claims.
- Supreme Court of India — for judgments interpreting the Payment of Gratuity Act and related labour legislation.
- Ministry of Labour and Employment — official notifications and circulars on Labour Code implementation.
Written by Editorial Team, The Courtroom · Last verified 2026-07-13
This article is for general information only and is not legal advice. Laws change; verify against the primary sources cited and consult a qualified advocate for your situation.
