New Delhi: The discussion about the new wage code is gaining momentum as the current month is coming to an end. Media reports are widely speculating that the Modi government may introduce four labor codes on wages, social security, industrial relations and occupational safety, health and working conditions from July 1.
If and when these labor codes are implemented, the new wage code will affect the working hours of employees, wage restructuring, PF contribution, gratuity aspect and encashment of earned leave. However, these are only preliminary speculations, so nothing concrete should happen until the government officially notifies the rules.
Here are five things that could change when the new Wage Code 2022 comes into force from July 1
1. New pay code to affect your salary. Your in-hand salary will be reduced once the wage code is implemented
Government notification on Code on Pay 2019 may reduce take-home pay, while components such as PF and Gratuity can get up. This is based on the premise that the new wage code stipulates that the basic pay of the employee shall be at least 50 per cent of his net monthly CTC.
2. The new pay code will affect your allowance component which is a part of your salary
Also, if the above provision is applicable, it would mean that the employees would not be able to receive more than 50 per cent of their net monthly salary as allowances.
3. New pay code to affect your provident fund, however positive. Your PF will be higher after the new wage code is implemented
This also means that there will be a consequent increase in the employee’s gratuity and PF contribution. Therefore, while the take home pay of employees may be reduced, the gratuity and PF component may increase.
4. The new pay code may increase the number of hours worked, however in that case your holiday will be greater than 2. The 12-hour work week may be the new factor
Experts are also of the view that the new draft will affect the working hours of employees, with some media reports saying that employees may be allowed a four-day work week, but they may be allowed to work within those four days. Have to work 12 hours. The Ministry of Labor has clearly made it clear that 48 hours weekly work is required.
5. After the implementation of the new wage code, there may be a big change in the Earn Leave Policy
The biggest change can be seen in terms of earned leave. Government departments now have 30 holidays in a year, defense employees will get 60 holidays in 1 year. At present there are 240 to 300 holidays in different departments. Employees can avail these leave in cash only after 20 years of service.
23 states pre-publish draft rules on new wage code
So far, 23 states have pre-published the draft rules on these laws, while the Center has completed the process of finalizing the draft rules on these codes in February 2021. The central government had notified four labor codes, namely, the Code on Wages, 2019, on August 8, 2019, and the Industrial Relations Code, 2020, the Social Security Code, 2020 and on September 29, 2020, for occupational safety, health and working conditions. Status Code, 2020.
Since labor is a concurrent subject, the Center wants the states to implement it in one go, as mentioned earlier.