When you switch jobs, your old employer settles your gratuity as a one-time payment, provided you meet the service condition: five years of continuous service for most employees, or one year under the contract for fixed-term employees. Gratuity does not move to your new employer, and your service count there starts from zero. The old employer must pay within 30 days from the date the gratuity becomes payable.
Since 21 November 2025, gratuity has been governed by the Code on Social Security, 2020, which replaced the Payment of Gratuity Act, 1972. The Social Security (Central) Rules, 2026, notified on 8 May 2026, set the current forms and timelines. If your employer falls under a state government's rules instead, the form and route can differ, so confirm which set applies to you.
This guide follows your gratuity from the day you resign to the day it reaches your bank account and shows where the date you leave can change the amount.
Do you get gratuity if you leave before five years?
Usually not. Most employees need five years of continuous service with one employer before gratuity becomes payable. Fixed-term employees are the main exception. They receive pro-rata gratuity, and the central rules ask for at least one year under the contract. Death and disablement also waive the five-year condition. Gratuity is linked to continuous service with one employer, so a move in year three or four generally ends the claim.
The law counts days actually worked to decide whether a year of service is continuous, but there is no safe shortcut such as 'four years and eight months is enough'. Ask HR for a written service calculation instead of relying on one. Also check coverage, because the gratuity law applies to specified establishments, and smaller employers should confirm whether it applies to them.
How much gratuity will you get when you switch jobs?
For a monthly-paid employee, gratuity equals last drawn monthly wages, multiplied by 15, divided by 26, multiplied by completed years of service. A part year of more than six months counts as a full year. Wages is a defined legal term, so the figure can differ from your basic salary or take-home pay.
'Wages' means basic pay, dearness allowance and retaining allowance, if any. Under the Code on Wages, if components excluded from wages exceed 50% of total remuneration, the excess is added back to wages for this calculation, and the revised definition applies from 21 November 2025. An employee whose pay has a small basic component can therefore see a higher wage base than before. Do not assume that wages equal 50% of your CTC. Ask HR which components were counted.
Can your gratuity move to your new employer when you switch jobs?
No. The employer you leave settles gratuity in cash at exit, and it does not carry over to your next employer. Your service count at the new company starts on day one, and the five-year condition applies afresh. The only exception is a group transfer that your employer records as continuous service in writing. Some employers treat a move within the same corporate group as a transfer of service rather than an exit.
That happens only when the transfer letter says so, so get it in writing before you move. Without that record, treat the move as an exit and expect payment from your old employer. The lifetime tax-exemption limit, in contrast, carries across employers, as the tax section below explains.
When must your old employer pay your gratuity?
Your old employer must pay within 30 days from the date the gratuity becomes payable. Under the central rules you apply in Form IV, ordinarily within 30 days of that date, and the employer replies in Form V within 15 days of receiving it. Final wages after resignation follow a separate two working day rule. Employers often process gratuity along with the full and final settlement, but the gratuity timeline stands on its own and does not wait for other exit items.
If payment is late, simple interest can apply at the rate notified by the Central Government. The Code allows a narrow exception where the delay was the employee's fault, and the employer holds the competent authority's written permission. Because rates and exceptions can change, ask for the interest working in writing if payment slips.
Keep proof of delivery of Form IV and note the date on which gratuity became payable, because the later dates run from it.
Is gratuity taxable when you change jobs?
For employees covered by the gratuity law, gratuity is tax-free up to the least of three amounts: the formula amount, the amount actually received, and ₹20 lakh. The ₹20 lakh limit is a lifetime limit across all employers, not a fresh limit at each job. Any amount above the exempt portion is taxed as salary.
What can you do if your old employer delays or refuses to pay?
Send a written claim in Form IV and keep proof of delivery. If the employer delays or rejects it, you can approach the competent authority in Form VI, ordinarily within 180 days. An employer can forfeit gratuity only on grounds listed in the code, and joining a competitor or leaving a handover unfinished is not one of them.
The Code allows forfeiture to the extent of the loss where a termination follows wilful damage or negligence affecting the employer's property. It also allows whole or partial forfeiture where services end for riotous or violent conduct, or for an offence involving moral turpitude committed in the course of employment. None of these grounds covers a pending project, a non-compete clause or an incomplete handover.
Before you escalate, ask in writing for four things: the eligibility decision, the wage base, the service period and the calculation sheet. The Form VI route applies where the central rules govern your employer. A state-sphere case follows the route notified by that State.
How should you time your exit to protect your gratuity?
Confirm three things before you resign: your joining date, the date your service will end on the employer's records, and the wage base the employer will use. A few weeks can move your counted years across a six-month or full-year mark, and a notice-period waiver can shorten your recorded service.
- Ask for a provisional gratuity statement before you resign. It should show your joining date, service end date, wage base and amount.
- If you are within a few weeks of a six-month or full-year mark, check whether moving your last day by a few days changes the counted years, and discuss your joining date with the new employer.
- When you compare offers, ask whether the new CTC includes a gratuity line, and whether it is paid monthly or only on exit, so that you compare offers on the same basis.
In practice, the date that decides the outcome is the service end date on the employer's records. Asking for the provisional statement before you resign, rather than after, leaves time to correct a wage base or a date.
October 12, 2026
5 mins read
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