PF Contributions, Take Home Salary, Work Hours: What Will Change Under Govt’s New Labour Laws?

The Union ministry of labour and employment may implement the new labour codes July 1 this year, according to a report. The central government has been working on designing the four new labour codes, under which there will be significant changes in terms of an employee’s salary, his or her PF contributions and work hours. As per reports, the central government under Prime Minister Narendra Modi is trying to implement the labour codes as soon as possible. However, it will need at least three months to come into effect as all states have not prepared the rules yet.

The central government is likely to implement the four new labour codes on wages, social security, industrial relations and occupation safety, health and working conditions, within three months from now.

What is Going to Change?

Under the new labour laws, one major thing that is likely to be implemented is the change in workdays. Once the new rule comes into effect, companies will be able to make employees work for four days instead of five, and there will be three week offs. However, there is a catch to it. Employees will need to work for 12 hours a day instead of eight, since work hours will not get reduced.

Another major change that this is going to bring in is that the ratio of the take home salary and the employees and employer’s contribution in provident fund. As per the provision of the new codes, the basic salary of the employee will have to be 50 per cent of the gross salary. While this will mean that PF contributions of the employee and employer will increase, the take home salary will decrease for some employees, especially those working in private firms. The money received after retirement as well as the gratuity amount will also increase under the provisions of the new draft rules.

“The four labour codes are likely to be implemented in the next financial year of 2022-23 as a large number of states have finalised draft rules on these. The Centre has completed the process of finalising the draft rules on these codes in February 2021. But since labour is a concurrent subject, the Centre wants the states to implement these as well in one go,” PTI had quoted a senior government official as saying last year.

The central government has notified four labour codes, namely, the Code on Wages, 2019, on August 8, 2019, and 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. As many as 13 states have already  pre-published draft rules on The Occupational Safety, Health and Working Conditions Code. These are Uttarakhand, Uttar Pradesh, Madhya Pradesh, Chhattisgarh, Odisha, Arunachal Pradesh, Haryana, Jharkhand, Punjab, Manipur, Bihar, Himachal Pradesh and UT of Jammu and Kashmir.

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