Home pay should be cut by 4 probable labor codes
If the reports are to be believed, deferred labor codes are expected to be implemented in the coming months, resulting in a reduction in the net wages of most employees, while the pension corpus is automatically increased.
He may recall that these codes were due to be implemented earlier in April 2021, which would have reduced take-home pay as the contingency fund contribution and bonus were likely to increase. Companies have had time to realign their pay structures, due to the delay, but now things are likely to be implemented. Even if an alignment did take place, it would be very rare for private sector employees, who earn a large salary, to get the same net amounts.
What is the new wage code?
According to the new wage code, employers must pay at least 50 percent of an employee’s CTC (cost to the company) as a base salary, which will increase the contribution to other items such as the contingency fund. and gratuities.
The new wage code, once implemented, would exclude bonuses, pensions, transport allowances, rent allowances, housing allowances, overtime, etc.
Companies tend to divide the salary into various allowances to keep the base salary low, which might not be possible with the new salary code.
These four labor codes will streamline 44 central labor laws. The ministry had even finalized the rules of the four codes. But these could not be implemented as many states were unable to notify rules under these codes in their jurisdiction. Labor is a competing subject under the Constitution of India and therefore the Center and the States must notify the rules under these four codes to make them the laws of the land in their respective jurisdictions. “Many large states have not finalized the rules under four codes. Some states are in the process of finalizing the rules for implementing these laws. The central government cannot wait indefinitely for states to tighten up the rules under these codes.
Therefore, he plans to implement these codes in a few months, as some time will need to be given to establishments or businesses to align with the new laws, ”a source told PTI. According to the source, some states had already released the draft rules. . These states are Uttar Pradesh, Bihar, Madhya Pradesh, Haryana, Odisha, Punjab, Gujarat, Karnataka and Uttarakhand. Under the new wage code, allowances are capped at 50 percent. This means that half of an employee’s gross salary would be base salary. The contribution to the provident fund is calculated as a percentage of the basic salary, which includes the basic salary and the provident allowance. Employers split wages into numerous allowances to keep base wages low to reduce contingency funds and tax burdens
With PTI entries
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Article first published: Sunday, June 6, 2021, 12:08 p.m. [IST]