New Wage Code: New Wage Code can be implemented soon for the employees. After its implementation, everything from the salary of the employees to the pension is sure to be affected. Many such provisions have been made in this, which is important for you to know.
New Delhi: New Wage Code: New Wage Code can be implemented soon for the employees. After its implementation, everything from the salary to the pension of the employees is sure to be affected. Many such provisions have been made in this, which is important for you to know. It has been claimed in many media reports that the new wage code may be implemented from the new financial system. But till now nothing has been said by the government officially.
What’s in the new wage code?
According to the Wage Code Act, 2019, the basic salary of an employee cannot be less than 50% of the cost of the company (CTC). At present, many companies reduce the basic salary and give more allowances from above so that the burden on the company is reduced.
Salary structure will change completely
With the implementation of the Wage Code Act, 2019, the salary structure of the employees will change completely. Employees’ (Take Home Salary) will decrease, because by increasing Basic Pay, employees’ PF will be deducted more, that is, their future will be more secure. Contribution to PF as well as Gratuity will increase. That is, take home salary will definitely decrease but The employee will get more amount on retirement.
Take home salary will decrease, retirement will improve
Due to the increase in Basic Pay, the PF of the employees will be deducted more, then their take-home salary will decrease. But, their future will be more secure. This will give more benefit on their retirement, as their contribution to Provident Fund (PF) and Monthly Gratuity will increase.
Headache will increase for companies
Let us tell you that the CTC of the employees depends on many factors. Like Basic Salary, House Rent (HRA), PF, Gratuity, LTC and Entertainment Allowance etc. With the implementation of the new Wage Code rule, companies will have to decide that the other factors to be included in the CTC, except the basic salary, should not exceed 50 percent. This can increase the headache of companies.
Difficulties may increase for those with higher salaries
The impact of the cut in take-home pay will be minimal for low- and middle-income earners. But high income earners may get a big setback. If the PF contribution of high earners will increase more, then their take home salary will also be sufficient, because the basic salary of the employees whose salary will be higher will also be more, hence the PF contribution will also be cut more. Gratuity will also be deducted more for such employees. Basic salary is taxable, so tax will be deducted more if the salary is higher.
