New Wage Code India: See Key Changes and 4 Labour Codes to be Introduced from 1 July

Publish Date: 21 Jun, 2022
New Wage Code India: See Key Changes and 4 Labour Codes to be Introduced from 1 July

Labour Codes 2022: According to media sources, the Centre government plans to enact four labour rules covering pay, social security, industrial relations, and occupational safety, health, and working conditions on July 1. The new wage code will have an impact on employees' working hours, compensation restructuring, PF contribution, gratuity aspect, and encashment of Earned Leaves, among other things, if these labour codes are applied. Nothing definitive should be inferred until the government formally announces the guidelines, as these are still early assumptions.

23 states have already pre-published draught regulations on these laws, while the Centre finished finalising the draught rules on these codes in February 2021. On August 8, 2019, the central government issued four labour codes: the Code on Wages, 2019, the Industrial Relations Code, 2020, the Code on Social Security, 2020, and the Occupational Safety, Health, and Working Conditions Code, 2020. On September 29, 2020, the central government issued the Industrial Relations Code, 2020, the Code on Social Security, 2020, and the Occupational Safety, Health, and Working Conditions Code, 2020.

Because labour is a concurrent subject, the Centre wants the states to implement both at the same time, as previously reported.


4 Labour Codes to be Implemented

 

Reduced in-hand salary 

The government's Code on Wages 2019 announcement may cut take-home pay while components like PF and Gratuity may increase. This is due to the fact that the new wage code stipulates that an employee's basic income must equal at least 50% of his or her net monthly CTC. As a result, if this provision takes effect, employees will be unable to receive more than 50% of their net monthly compensation in the form of allowance.

Higher PF after implementation of Wage Code

This also indicates that the employee's gratuity and PF contribution will increase as a result. As a result, while employees' take-home pay may be lowered, the Gratuity and PF component may increase.

12 hours work-week

Experts believe that the new draught will have an impact on employee working hours, with some media reports claiming that employees would be granted a four-day workweek but will be required to work for 12 hours on those four days. The labour ministry appears to have said unequivocally that a 48-hour weekly work minimum is required.

Big changes in Earned Leave policy

The most significant change was observed in situations of Earned Leave. Government employees now have 30 vacation days per year, whereas defence employees have 60 vacation days per year. Employees can carry forward up to 300 vacation days, but the labour union is requesting that the number of vacation days be increased to 450 in the new code. There are currently 240 to 300 holidays in several departments. Only after 20 years of service may employees take these vacations in cash.

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