#NewDelhi: In the new year you are hoping that your salary (New Labor Code) will definitely increase. But do you know that with the salary increase, the central government is going to take an important decision. And that is going to reduce your Take Home Salary. In this case, the salaries of those employees will be further reduced from now on, whose salaries will not increase next year.
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It is learned that the central government is going to implement four labor laws (New Wage Code). Not only that, in the next financial year, it is likely to be effective (New Labor Code). As soon as this law comes into force, your take home salary and PF rule will change drastically. As a result, your take home salary will decrease, while provident fund i.e. PF will increase.
Drafts are being prepared in 13 states
The four labor codes on wages, social security, industrial relations and occupational safety and health and working conditions could be implemented within the next financial year. Informing about this, a senior official said that at least 13 states have drafted rules for these laws.
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It is pertinent to note that the Center has finalized the rules under these codes (New Labor Code) and now the states have to make rules for them, as labor is a matter of contemporary list. The Center completed the process of finalizing the draft rules for these codes in February 2021, but since labor is a contemporary issue, the Center wants the states to implement it simultaneously.
According to sources, the new law will significantly change the basic salary of employees and the method of calculating future funds. One of the advantages of this is that the contribution to your PF account will increase every month. Under the new wage code, allowances will be limited to 50 percent. In other words, 50 percent of the total salary of the employees will be the basic salary.
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The share of PF will increaseNow employers divide salaries into several types of allowances. This keeps the basic salary low, which reduces the contribution of future funds and income tax. Under the new wage code, the contribution of the provident fund will be fixed at the rate of 50 per cent of the total salary. Increasing employee contributions to PF will increase the financial burden on companies. With this more basic salary means the amount of gratuity will be more than before and it can be one to one and a half times more than before.
At the same time, Union Labor Minister Bhupendra Yadav, in response to a question in the Rajya Sabha earlier this week, said that at least 13 states had drafted rules on labor codes on occupational safety, health and working conditions. In addition, 24 states and union territories have drafted labor code rules on wages.
An employee’s Cost To Company (CTC) consists of three to four components. Basic Salary, House Rent Allowance (HRA), Retirement benefits such as PF, Gratuity and Pension and Tax Saving Allowance such as LTA and Entertainment Allowance. Now the new wage code has decided that the allowance cannot exceed 50 per cent of the total salary at any cost. In this case, if the salary of an employee is Rs 40,000 per month, then his basic salary should be Rs 20,000 and his allowances should come to the remaining Rs 20,000.
Offer to work 4 days a weekThe new wage code provides a number of provisions that will affect the salaried class working in offices, and even workers in mills. Starting from the salary of the employees, their leave and working hours will also change. Under the new wage code, working hours will be increased to 12. According to the Ministry of Labor and Employment, the proposed labor rules state that the 48-hour-a-week rule will apply.
Incidentally, some unions raised questions about the 12-hour work and 3-day leave rules. In this regard, the government has said in its explanation that there will be only 48 hours of work per week, if someone works 8 hours a day, he will have to work 6 days a week and will get one day off.
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