You may soon see a big change in your gratuity, PF and work hours. Employee’s Gratuity and Provident Fund (PF) item increases. At the same time, the money at hand (take home salary) is reduced. Companies’ balance sheets are also affected. The reason for this is the three pay code bill passed in parliament last year (the Wage Code Bill). The government wanted to implement the new labor code from April 1, but has postponed allowing states to prepare and give more time to change human resources policies.
Under the new definition of wages, allowances will be 50 percent of the maximum wage. This means that the basic salary (basic salary and dearness allowance in government jobs) must be 50 percent or more of the total salary from April. Significantly, this is the first time in the country’s 73-year history that changes are being made to labor law. The government claims it will prove beneficial to employers and workers.
Proposal to change 12 hours of working hours
The new draft law proposes to increase the maximum working time to 12. The draft rules of the OSCH code also provide for adding 15 to 30 minutes of overtime by counting 30 minutes of overtime. Under the current rule, less than 30 minutes is not considered an overtime entitlement. The draft rules prohibit any employee from working continuously for more than 5 hours. Instructions for giving employees half an hour rest after every five hours are included in the draft rules.
So the salary goes down and the PF goes up
Under the new draft rule, the base salary must be 50% or more of the total salary. This changes the pay structure of most employees, since the non-salary portion of the pay is usually less than 50 percent of the total wage. At the same time, the share of allowances in the total wage increases. Increasing base salary will also increase your PF. PF is based on basic salary. Increasing the base salary will increase PF, which means a reduction in take-home or on-hand pay.
Retirement Amounts Increase
Increase of gratuity and PF contribution will increase the amount received after retirement. This will make life easier for people after retirement. The biggest change is the salary structure of the highest paid officers and thus they are greatly affected. Increasing PF and gratuity also increases the cost of companies. This is because they too have to contribute more to the PF. The balance sheet of companies is also affected by these issues.
Do employees have to work four days a week instead of five, get 3 days leave? Will the Modi government change the rules?
