New Wage Code: If the government implements new labor laws from July 1. Your salary structure will change. There will be an increase in the amount transferred to your PF account. Gratuity will also increase along with the amount received after retirement. As a result of this the employees will be able to lead a better life after retirement.
New Wage Code: From July 1, 2022, the central government intends to introduce new labor laws. If this is implemented, the office working hours, Employees’ Provident Fund (EPF) contribution and in-hand salary will change significantly. While your office hours and PF amount are expected to increase, in-hand salary is expected to decrease.
The administration is demanding the early implementation of four new labor codes. The administration believes that the new labor rules will boost investment and employment prospects in the country.
Wages, social security (pension, gratuity), labor welfare, health, safety and working conditions are all included in the recently passed labor codes (including for women).
What will change if new labor laws are implemented?
If the new labor rules are approved, businesses will be able to dramatically change office working hours. They have the option to increase the office working hours from 8 to 12 hours. However, they have to compensate their employees by providing three weekly off days. The goal is to keep the total number of hours worked in a week constant.
In addition, the maximum number of overtime hours for workers in a quarter has been increased from 50 hours (under the Factories Act) to 125 hours (under the new labor rules).
Both the take-home salary component and the employer’s contribution to the provident fund will change significantly. Under the new code, the basic salary of the employee can be reduced by 50% of the gross salary. This will increase the PF contribution of both the employee and the employer. Some employees, especially those in the private sector, will see a drop in their take-home pay.
Gratuity will also increase along with the amount received after retirement. As a result of this the employees will be able to lead a better life after retirement.
The government also wants to simplify how much leave an employee can take during his employment, as well as how much leave can be carried over to the next year and how much leave can be encashed while in service. The amended labor codes have reduced the number of days required to be eligible for leave each year from 240 to 180.
However, the number of paid days will remain the same, with one day of paid time worked for every 20 days. Similarly, no modification has been recommended in the carry forward limit, which remains at 30 days.
The Central Government has recognized Work from Home (WFH), which is becoming common practice across sectors, in the draft Model Standing Order applicable to the service industry, especially after the advent of the COVID-19 pandemic.
According to reports, 23 states have adopted labor laws. The remaining seven have not done so yet. These codes were passed by the legislature.
