Renewed salary structure from July! New Wage Code may be implemented, working hours, holidays likely to be affected


New Delhi: The discussion on the new Wages Code is yet again gaining steam with media reports stating that renewed salary structure will be implemented from July.

The new wage code was to be implemented from April 1, but the Ministry of Labour postponed it. Media reports said that if the same is implemented from July, then there can be a big change in the salary structure of the job seekers.

Take home pay to be affected

The government’s notification on Code on Wages 2019 may reduce the take-home pay of employees next financial year ie, April 2021 while components like PF and Gratuity might rise. This is based on the grounds that the new wage code mentions provision entailing that the employee’s basic salary will be at least 50 percent of his/her net monthly CTC. Hence, if this provision comes into effect, it will mean that employees will not be able to get more than 50 percent of his/her net monthly salary in form of allowance.

PF, Gratuity to be impacted

This also means that there will be a consequent rise in gratuity and PF contribution of the employee. Hence, while the take home pay of the employees may be reduced, the Gratuity and PF component may rise.

Working hours, holidays will also be affected

According to the news published on our affiliate website Zee Business – EPFO ​​Board Member and General Secretary of Bharatiya Mazdoor Sangh, Virjesh Upadhyay said that the Ministry of Labour will soon issue separate notifications of all the four codes. By July, all companies will also have to make changes in the software at their own level. According to Virjesh Upadhyay, there has to be a change in the rules on important issues like employees’ working hours, annual holidays, pension, PF, take home salary, retirement. The new rules are likely to be changed before July.

Reports also said that the labour union has made a demand regarding PF and annual holidays. The labour union is demanding that the earned Leave should be increased from 240 to 300.

Code on Wages 2019

The Ministry of Labour and Employment has finalised rules under the four labour codes paving the way for making reforms a reality by notifying those for implementation soon. The four broad codes on wages, industrial relations, social security and occupational safety, health & working conditions (OSH) have already been notified after getting the President’s assent. But for implementing these four codes, the rules need to be notified.

Parliament had passed four codes on four broad codes on wages, industrial relations, social security and occupational safety health & working conditions (OSH) which would ultimately rationalise 44 central labour laws.

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