New Labor Code: 3 weeks relaxation, PF more, good news on July 1

Modi government has made new labor codes for employees and jobs. It is expected that these can be implemented from July 1, which is long overdue. The government is bringing in four labor codes which will benefit both the employee and the employer. Through the new labor code, the Modi government is going to improve […]
 


New Labor Code: 3 weeks relaxation, PF more, good news on July 1

Modi government has made new labor codes for employees and jobs. It is expected that these can be implemented from July 1, which is long overdue. The government is bringing in four labor codes which will benefit both the employee and the employer. Through the new labor code, the Modi government is going to improve the wages of employees, social security like pension and graduation, labor welfare, health, safety and working conditions. That is, after the new labor code, there will be a change in the working hours i.e. working hours and holidays under the new labor code.

4 days work and 3 days weekend, overtime will also be available from above

After the implementation of the new labor code, it is proposed to increase the maximum working hours to 12. However, the weekly limit will be kept at 48 hours. That is, work for 4 days in the new system and if you work for 12 hours a day, then you will also get 3 days off. Hence the overtime hours have also been increased from 50 hours to 125 hours in a quarter. It allows employees to earn extra money by working overtime on weekends.

Arranging for 12 hours of work and overtime is a double-edged sword

In the new system only 4 days of work and 3 days off… It sounds good but the reality is a bit different. The 4 days you work will be 12-12 hours. The effect of working late can be seen on your health. That’s why companies can ask for overtime. In such a situation, even if you get a little more money, then your work will increase a lot. If seen in such a situation, it can ruin your health.

Holiday will start in just 180 days

A major change has also been made in the new labor code regarding holidays. Till now a new employee had to work for a minimum of 240 days to take leave, but now the employee will be eligible to take leave only in 180 days. This means you will now have to work fewer days to reach the leave eligibility limit. This step of the government is going to give a big relief to the employees.

How many holidays will be given, how much will be extended

The government has kept the number of holidays the same in the new system. That is, if you work every 20 days, then you will get 1 day off. Also the number of holidays to be carried forward without changing the number to 30. However, the provisions of the holiday, which were earlier applicable only to the manufacturing industry, will now be applicable to all sectors. This step is being praised a lot.

You will receive holiday pay at the end of each year

Under the new Labor Code, it is now mandatory to have paid leave at the end of each year. That is, if you have 45 days of leave left at the end of the year, then 30 holidays will be carried forward, but the remaining 15 holidays will be redeemed. According to the rules, holidays are paid only at the end of the year, but after the new labor code, the system will change.

Work from home was also taken care of

Working from home has emerged as an important practice in the Corona era. In such a situation, the Central Government has also taken care of this while preparing the draft of the new Labor Code. However, the picture of what kind of provisions will be made on this is not clear yet. Under the new system, companies can also make some guidelines for work from home. Work from home can make a significant contribution to the work-life balance. Many companies are still adopting the hybrid model with some working from home and some working from office. Most of the employees are also opting for this model.

How much will the salary decrease?

According to the new rules, the basic pay of an employee will be up to 50 percent of the basic pay and the remaining 50 percent will be all kinds of allowances. At present the companies keep only 25-30% of the basic salary. All allowances in such cases are in the range of 70-75 per cent. These allowances bring more salary to the account of the employees, as all deductions are made on the basic pay and it is very less. In such a situation, after the implementation of the new pay code, there may be a reduction of 7-10% in your inhand salary.

How much will the contribution in PF increase?

If the basic pay is increased, then the contribution to PF will also increase. Because PF is calculated on the basis of basic pay. 12-12 per cent of the basic salary is contributed by the employer and the employee to the provident fund. If your company pays only 25-30% CTC as basic pay, it means that your contribution to PF will almost double after the implementation of the new pay code.

understand with an example

Suppose at present your basic salary is 10 thousand rupees, which is 25 percent of CTC and the salary in hand is 35 thousand rupees. Keep in mind that this salary is 12-12 per cent after you and the employer’s PF contribution and gratuity. After the implementation of the new wage code, the basic pay will be Rs 20,000. In such a situation, the contribution and gratuity in PF will be doubled. This means that the salary can be deducted at around Rs 2,800, which is 12-12 per cent i.e. Rs 2,400 PF and let’s assume the gratuity is close to Rs 400. In this way your inhand salary used to be Rs 35,000 but now it can be reduced to Rs 32,200.

pension will increase

There are two types of deduction in provident fund. One is Provident Fund and the other is Employees’ Pension Scheme. Of the 12 per cent contributed by the employer to the provident fund, only 3.67 per cent goes to the provident fund, while 8.33 per cent goes to the employee pension scheme. So the entire 12 percent contribution made by the employee goes to the provident fund. The contribution to PF by the employee will also increase due to the increase in the basic pay after the new pay code. This means that the contribution to the pension scheme of the employees will also increase. Suppose now both employer and employee put Rs 1200-1200 in PF and company pays only 25 per cent of basic salary, then after new pay code it will be Rs 2400-2400. This means that Rs 833 which used to go from employer to employee pension scheme will now become Rs 1666.

salary structure will change

Companies often try to put more money in the hands of an employee through special allowances. If the contribution to PF and gratuity increases due to increase in basic pay, companies will change the pay structure and reduce the special allowances. That is, your CTC will remain the same as it is now but your basic salary will increase and special allowance will decrease. Those companies which do not have special allowance system, their salary structure will be changed in such a way that there is no loss to the companies.

What are these four labor codes?

The 4 labor codes include the Wage/Labor Code, the Code on Industrial Relations, the Code on Job Security, Health and Working Conditions, and the Social and Occupational Safety Code. In order to amend labor laws, the ministry has consolidated 44 types of old labor laws into four comprehensive codes. It is being said that with the implementation of this code, a new era of revised rules and regulations will be started in the labor market of the country.