New Wage Code Update: As soon as the month of July comes, once again the discussion has started regarding the new Wages Code. The new wage code was to be implemented from April 1, but the Ministry of Labor postponed it. Now it can be implemented from July. If this happens, then there can be a big change in the salary structure of the job seekers. There may be a decrease in the Take Home Salary of the employees.
What is New Wage Code?
The government has prepared 4 new wage codes by combining 29 labor laws. these are the four codes
1- Industrial Relations Code
2- Code on Occupational Safety
3- Health and Working Conditions Code (OSH)
4- Social Security Code and Code on Wages
According to the Wage Code Act, 2019, the basic salary of an employee cannot be less than 50% of the cost of the company (CTC). At present, many companies reduce the basic salary and give more allowances from above so that the burden on the company is reduced.
Salary structure will change completely
After the implementation of the Wage Code Act, 2019, the salary structure of the employees will change completely. The ‘Take Home Salary’ of the employees will decrease because by increasing the Basic Pay, the PF of the employees will be deducted more, that is, their future will be more secure. Along with the PF, the contribution to the gratuity will also increase. That is, the take-home salary will definitely increase. But the employee will get more amount on retirement. The new wage code will also be applicable for unorganized sector employees. The rules related to salary and bonus will change and there will be equality in the salary of employees working in every industry and sector.
Application deadline July
According to the news published on our affiliate website Zee Business – EPFO Board Member and General Secretary of Bharatiya Mazdoor Sangh, Virjesh Upadhyay says that labor laws include 4 labor codes. How these four will be implemented has to be decided. The Ministry of Labor will soon issue separate notifications of all four codes. By July, all companies will also have to make changes in the software at their own level. However, due to the conditions of the corona epidemic that have been there till last month, companies may have fewer windows left. But, for now, the deadline is July.
Working hours, holidays will also be affected
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. According to an official of the Labor Reform Cell of the Ministry of Labor, the labor union has made a demand regarding PF and annual holidays, the union is demanding that the Earned Leave should be increased from 240 to 300.
Companies’ headache will increase
Let us tell you that the CTC of the employees depends on many factors. Like Basic Salary, House Rent (HRA), PF, Gratuity, LTC and Entertainment Allowance, etc. With the implementation of the new Wage Code rule, companies will have to decide that the other factors to be included in the CTC except basic salary should not exceed 50 percent. This can increase the headache of companies.