Herttz Global Compliance Services Pvt Ltd

Your Compliance Partner

We, hgcompliance.com, provide end-to-end services with consultation & Labour Law Opinions to carry out and establish Labour Law Compliance under various enactments of Labour Law. Our team will help you with any aspect of employment/labour law. The four labour codes on wages, social security, industrial relations and occupation safety, health and working conditions are likely to be implemented from July 1. “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,” officials had said in December. Once the new codes come into force, the take home salary would be lesser as the PF contribution would go up.

There is also a likelihood that the four day work week would be implemented. Employees may have to work for 12 hours a day as the Labour Ministry made it clear that the requirement for a 48 hour weekly work is compulsory. So, here are the likely changes expected with the implementation of the new labour code: 4-day work week Under the new rules, employees in India may be able to enjoy a four-day workweek, as opposed to the current five-day workweek from 2022-23.

This means, an employee will have a 3-day holiday/week but there is catch. During this 4-day workweek, employees need to work for 12 hours to keep the weekly work hours in check. Also, the new laws would also imply that the maximum overtime hours shall increase from 50hours to 125 hours across all sectors.

Your take home salary and the changes to the employees and employer EPF contribution One of the significant move after the new labour code implementation is that there would be a reduction in the take-home pay of employees and hence there will be more money in PFs. This will change the way an employee’s basic pay and PF are calculated. Half of the salary would be basic wages and allowances would be restricted to 50 per cent, as per sources.

PF is a contribution that is made to the Provident Fund by both the employer and the employee. Currently, it is calculated based on the employee’s basic pay and dearness allowance. Given that basic pay would be increased, more PF will be deducted, thereby bringing down the in-hand salary of the employee. Better retirement fund As per the provisions of the new rules, the retirement corpus of employees shall also see an increase as per the new rules. Leave related rules shall also be streamlined The leave related rules shall also be aligned.

This includes rationalisation in respect of the carry forward of the leaves to the successive year as well as encashment of leaves. Also, the government is considering work from home model that has gained prominence amid the pandemic. –Ivan Antony John