What is the new wage code? Here’s how it will affect your salary, PF, pension, tip
The new wage code is close to reaching its central government completion stage and will be implemented during this fiscal year. Many changes have been made as part of this bill relating to employee leave, wages and working hours.
The decision on EPF, Salary, Probable pension
According to Virjesh Upadhyay, member of the board of directors of EPFO and general secretary of Bharatiya Mazdoor Sangh, important changes must be made to the new labor laws. In particular, the rules must be applied on important issues such as employee working hours, annual leave, pension, PF, net salary, retirement. State consent is also required to implement the new rules, which is the main reason for its delay. However, before the implementation of the new wage code, the draft line and the notification thereof will be published.
There is a demand to increase the limit of public holidays
On condition of anonymity, an official from the Labor Reform Unit of the Ministry of Labor revealed that the union had submitted a request for public service and annual leave.
The union wants the limit of acquired leave to be reduced from 240 days to 300 days. Separate rules may be established for the building and construction sector, beedi workers, journalists and persons associated with the film industry.
Changes to EPF rules
According to Virjesh Upadhyay, the government has demanded that the eligibility of the Employee Benefit Scheme (EPF) be increased from Rs 15,000 to Rs 25,000 or at least Rs 21,000 as the state employee insurance scheme. The final round of discussions on the laws is underway.
What is the new wage code?
The central government created 4 new codes by combining 29 central labor laws. These include the Code of Professional Relations, the Code of Occupational Safety, Health and Working Conditions (SST), the Social Security Code and the Wages Code. Some new concepts have been introduced into labor codes. But, the biggest change is the broadening of the definition of “salary”. The new labor code aims for consolidation, that is to say that 50% of the salary will be directly included in the salary.
What does the new wage code consist of?
According to the Law on the Wages Code, the base salary of an employee cannot be less than 50% of the cost to the company (CTC). At present, many companies are reducing the base salary and giving more additional allowances in order to reduce the burden on the company.
Take home pay will decrease, better retirement benefits
Experts say if employees’ PFs will be deducted more due to an increase in base salary, then their take-home pay may be lower, but their future will be more secure. This will give them more benefits in retirement, as their contribution to the provident fund (PF) and monthly bonus will increase.