A new wage code is set to go into effect from 1 July: Office hours, pay, and PF may change

The four labor laws, which cover wages, social security, labor relations, and workplace health, safety, and environment, are likely to go into effect on July 1. 

What is wage code? 

The 44 labor laws in India were being considered for consolidation into four codes in 2015 by the Narendra Modi administration in an effort to streamline the labor regulations and increase corporate accessibility.  

In her speech introducing the 2019 Union Budget, Finance Minister Nirmala Sitharaman said, “This would guarantee that the registration and filing of returns processes are streamlined and uniform. There should be less contention as diverse definitions relating to labor become more standardized.   

 ” The first of the proposed codes is the Code on Wages. The Code on Social Security, the Industrial Relations Code, and the Occupational Safety, Health, and Working Conditions Code make up the remaining three. 

 New wage code implementation from 1 July 

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 labour codes on wages, social security, industrial relations, and occupation safety, health, and working conditions starting July 1. The new wage code will affect all the previously listed factors if these labor rules are put into effect.  

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

Decreased in-hand pay following the implementation of the wage code- 

The take-home pay could decrease as a result of the government’s Code on Wages 2019 announcement, but components like PF and Gratuity could increase. This is justified by the fact that the new wage code has a clause stipulating that the employee’s basic pay must equal at least 50% of his or her net monthly CTC. Therefore, if this clause becomes law, employees won’t be allowed to receive more than half of their net monthly wage in the form of an allowance. 

After the Wage Code is implemented, PF will increase- 

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

Twelve hours work each day- week- 

The latest draft, 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. 

After the implementation of the new pay law, there have been significant modifications to the 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.