From next year, the employees will get an increase in the amount of Gratuity and Provident Fund (PF) items. 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 bills are likely to come into effect from April 1 next year.
Under the new definition of wages, allowances constitute a maximum of 50 percent of the total wage. This means that the base salary (basic salary and dearness allowance for 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.
So the salary goes down and the PF goes up
Under the new draft rule, the basic 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% 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.
The amount of retirement will increase
Increasing the gratuity and PF contribution will increase the amount received after retirement. This will make life easier for people after retirement. The salary structure of highly paid officers varies greatly and is highly affected. Increasing PF and gratuity also increases the cost of companies. This is because they too need to contribute more to the PF. The balance sheet of companies is also affected by these issues.
It is proposed that the working hours are 12 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 overtime by counting 30 minutes. 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.
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