Work hours, take-home salary may change as new labour laws kick in

New labour laws are set to hit the country soon and this is likely bring in changes to the in-hand salary, contribution to Employees’ Provident Fund and working hours.

The Centre has subsumed 29 Central labour laws to four labour codes — wages, social security, industrial relations, occupational safety, health and working conditions.

The Centre has notified the four laws, namely, the Code on Wages, 2019, on August 8, 2019; the Industrial Relations Code, 2020, the Code on Social Security, 2020, and the Occupational Safety, Health and Working Conditions Code, 2020 on September 29, 2020.

These are set to take effect from July 1 dependent on states as labour is a subject in the Concurrent List of the Constitution, the states need to notify the rules separately.

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Minister of State for Labour and Employment Rameshwar Teli had told Lok Sabha that only 23 states and Union territories have published the draft rules on Code of Wages.

These laws allow companies to increase working hours from 8-9 hours to 12 hours a day but then they will have to give the employees 3 days off in a week. Overall, a company can make an employee work 48 hours in a week.

The break-up of the salary will also change, with basic salary forming 50% of the total package. This will mean that there is a higher PF contribution from employees and employers. The retirement corpus and gratuity pay too will increase. However, this would mean that the in-hand salary goes down for employees in private sector.

The Code on Wages also mandates the company to pay all wages and reimbursements to an employee who is exiting an organisation within two working days, though not all states require that this be done when an employee himself/herself resigns.

Experts believe that the new laws will help companies provide better welfare and working conditions and also help address workers’ concerns.