Highlights

  • Labour is a concurrent subject
  • Code on Wages 2019 may reduce the take-home pay
  • Employees PF and Gratuity may increase

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23 states have pre-published draft rules on these laws, while the Centre has completed the process of finalising the draft rules on these codes in February 2021. 

New Labour Code 2022: The New Wage Code would affect your take-home salary and your PF savings in a big way. Editorji breaks down the Wage Code and if you are impacted by it.

The government's notification on Code on Wages 2019 may reduce the take-home pay while components like PF and Gratuity might rise. This is based on the grounds that the new wage code mentions provision entailing that the employee's basic salary will be at least 50 percent of his/her net monthly CTC. Hence, if this provision comes into effect, it will mean that employees will not be able to get more than 50 percent of his/her net monthly salary in form of an allowance.

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A big boost also comes in as the code directs companies to pay all the dues as well as the full and final settlement to employees within two days of the resignation, dismissal or retirement. Reducing the drag that many changing jobs face.

What may be a sweeping change, under the new rules, daily and weekly working hours have been capped at 12 hours and 48 hours. This will allow companies to bring in 4-day workweeks, while overtime has been increased from 50 hours to 125 hours in a quarter across industries.

You will not get more leave but how ou 'earn it' is set to change. As per the wage code, employees will now earn a leave for every 20 days of work instead of 45. New employees will also be eligible to earn leaves after 180 days of employment instead of 240 days of work.

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Labour is a concurrent subject so even as the Centre sets out its notification, the states also have to do the same for it to be applicable. So far 23 states have framed state labour codes and rules based on the new Code on Wages, 2019.

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