All four labor codes will be implemented in the next few months. The central government is preparing to proceed with the implementation of these laws. After the implementation of this law, the salaries (taken home) of the employees will be reduced, while the liability of the Companies Futures Fund (PF) will increase. Following the implementation of the Wage Code, there is a significant change in the way employees calculate basic pay and future funds.
The Ministry of Labor wants to implement these four codes…. Industrial Relations, Wages, Social Security, and Occupational and Health Care and Working Conditions from April 1, 2021. These four labor codes harmonize 44 central labor laws. The Ministry has finalized the rules under these four codes. But many states are not in a position to issue these rules under the respective codes.
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The rules could come into effect soon
A source said, “Many major states have not finalized regulations under these four codes. Some states are in the process of finalizing regulations for the implementation of these laws. The central government cannot always wait for states to finalize these rules. In such a situation, the government plans to implement these laws within one or two months as companies and institutions need to give them some time to adjust to the new laws.
Sources said some states have already issued draft regulations. These states include Uttar Pradesh, Bihar, Madhya Pradesh, Haryana, Odisha, Punjab, Gujarat, Karnataka and Uttarakhand.
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Here are the new rules
Under the new pay code, allowances will be capped at 50 per cent. This means that 50 percent of the employee’s total salary is the base salary. The predicted fund is calculated based on the percentage of the original fund. It includes basic salary and dearness allowance.
Currently, employers divide salaries into several types of allowances. This reduces the base salary, thereby reducing the contribution to the future fund and income tax. Under the New Wage Code, the contribution of the predicted fund is set at 50 percent of the total salary.