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New Labour Law: Salary, PF, Working Hours and Gratuity Likely to Change from October 1

Shigraf Zahbi
Shigraf Zahbi
The new labour code would make several changes to the existing structure

Prime Minister’s Narendra Modi’s government is making a number of changes to the existing labour laws. These changes would most probably come into force from October 1. Once implemented, they could affect salary, working hours, PF, gratuity, and more.

Longer Working Hours 

According to the new labour code, working hours of employees would be increased 12 hours. Presently, the working hours is fixed at nine hours a day.  

Lesser In-hand Salary 

The in-hand salary is also likely to become less once the new labour law comes into force. The draft labour law says that the basic pay of the employees could be 50 per cent or more of the total salary. This would considerably change salary structure as the non-perks part of the salary would become less than 50 per cent of the total salary. Other allowances allotted in the salary would also change.

Increased PF and Gratuity 

There would be an increase in PF and gratuity and this entails that the money received upon retirement would be more.  

Resting Periods and Overtime 

The new draft labour code has proposed that any work done between 15-30 minutes after the working hours should be counted as overtime for 30 minutes. Presently, 30 minutes duration of work outside working hours is not counted as overtime. Furthermore, the draft also prohibits any employee to work continuously for more than 5 hours. It has included in its instructions a half-an-hour resting period after every five hour.


The new labour laws are likely to increase working hours by a margin of three hours and lessen in-hand salary. The PF and gratuity are, however, likely to increase. It means that while the employees would have more money after employment, they will go home late and with lesser in-hand salaries.

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