Your monthly in-hand salary to reduce under India's new labour codes? Facts here

The four labour codes on social security, wages, industrial relations and occupation, safety and health and working conditions are likely to come into effect by the next financial year as at least 13 states, including Uttar Pradesh and Madhya Pradesh, have published draft rules on these laws.

The Central Government has finalised the rules under these codes and is waiting for states to frame regulations as labour is a concurrent subject. A senior official told PTI that four labour codes are likely to be enacted by the next fiscal year (2022-23).

"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," the official said.

Will your monthly in-hand salary reduce under India's new labour codes? 

Under the new wages code, allowances are capped at 50% which means that half of the gross pay of an employee would be basic wages. Provident fund (PF) contribution is calculated as a percentage of the basic wage, which includes basic pay and dearness allowance. The new 'Code on Wages' provides for PF contribution as a prescribed proportion of 50% of gross pay.

After the new codes come into effect, the take-home pay of employees would have increased in many cases. The employees can also expect higher post-retirement benefits because of increased PF compensation, along with better social security benefits.

As reforms in labour codes are likely to come up in the next fiscal, this would give employers more time to restructure the salaries of their employees.

In a reply to Rajya Sabha, Union Labour Minister Bhupender Yadav had said last week that 24 states had pre-published draft rules on The Code of Wages.

These states are Bihar, Uttarakhand, Madhya Pradesh, Uttar Pradesh, Karnataka, Odisha, Punjab, Gujarat, Tripura, Rajasthan, Chhattisgarh, Arunachal Pradesh, Jharkhand, Himachal Pradesh, Maharashtra, Goa, Mizoram, Haryana, Assam, Telangana, Manipur, UTs of Puducherry, GNCT of Delhi and Jammu and Kashmir.

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