New Wage Code to Start from July 1; See How Salary, PF, Work Hours Will Change

New Wage Code: According to media reports, there could be significant changes in terms of salary restructuring, PF and gratuity component, working hours, and Earned Leaves if the Modi government implements four labor codes on wages, social security, industrial relations, occupation safety, health, and working conditions starting tomorrow (July 1). 

The new wage code will affect all the previously listed factors if these labor rules are put into effect. Since these are only early rumors, nothing firm should be proposed until the government formally announces the regulations.

While the Center finished the process of finalizing the draught regulations on these codes in February 2021, 23 states had already pre-published draught rules on these laws. The Code on Wages, 2019, the Industrial Relations Code, 2020, the Code on Social Security, and the Occupational Safety, Health and Working Conditions Code, 2020 were the four labor codes that the central government had announced, and they were all effective as of September 29, 2020.

The Center wants the states to execute these in one go because labor is a contemporaneous concern, as was previously reported.

In-Hand Salary to be Reduced After the Wage Code is Implemented

The government's announcement of the Code on Wages 2019 may result in a decrease in take-home pay while raising components like PF and Gratuity.

Based on the fact that the new wage law contains a clause stating that the employee's basic salary must equal at least 50% of his or her net monthly CTC, this conclusion is justified. Therefore, if this clause is implemented, employees will not be permitted to receive an allowance that is greater than 50% of their net monthly wage.

PF will be Higher After the Wage Code is Implemented

Additionally, this implies that the employee's gratuity and PF contribution will increase as a result. As a result, while the employees' take-home pay may decrease, the Gratuity and PF components may increase.

12 Hours Work Week will be Implemented

The latest proposal, according to experts, will have an impact on how long employees are required to work each day. According to certain media sources, employees may be permitted a four-day workweek, but they will be required to put in 12 hours each day. According to reports, the labor ministry has stated unequivocally that a 48-hour work week is a must.

Big Change in Earned Leave Policy

The areas of earned leave where the most change might be noted. Defense employees now have 60 holidays in a year, compared to 30 for government agencies. Employees are permitted to carry forward up to 300 holidays for pay, but the labor union is pushing for a new regulation to boost the number of holidays to 450. There are currently between 240 and 300 holidays across many departments. After 20 years of service, employees can only take their holidays for pay.