New Labor Code Update: Minister of State for Labor Rameshwar Teli has given his answer by implementing the New Wage Code in the Lok Sabha. He has told that many states have presented their drafts. The states have put forth your side on the four labor codes. Let’s know the latest updates.
The latest update has come on New Wage Code. In the Lok Sabha, Minister of State for Labor Rameshwar Teli has presented his answer by implementing the New Wage Code. Minister of State Rameshwar Teli has told that many states have submitted their drafts. The states have put forth your side on the four labor codes. Rameshwar Teli has told which states have presented its chart so far.
Know when it will be implemented?
Actually, the Ministry of Labor and Employment has finalized the rules under 4 Labor Codes. 4 Labor codes include the Wage/Wage Code, the Code on Industrial Relations, the Code on Work-Special Safety, the Code on Health and Work Conditions (OSH), and the Social and Occupational Safety Code. These four codes have been notified after getting the assent of the President, but the rules also need to be notified for their implementation. Let us know which states have agreed on which code. It is expected that by October this year, the New Wage Code will be implemented.
1. Wage / Wages Code (The Code on Wages, 2019) : A total of 31 states including Uttar Pradesh, Gujarat, Goa have given their consent to this.
2. The Code on Social Security, 2020 : A total of 25 states including Gujarat, Haryana, Madhya Pradesh have agreed to this.
3. Code on Industrial Relations (The Industrial Relations Code, 2020) : 26 people including bihar, Gujarat, Haryana have accepted it.
4. Code on Health and Working Conditions (OSH) (The Occupational Safety Health and Working Conditions Code, 2020) : A total of 24 states including Bihar, Assam, Goa, Gujarat have agreed to this code.
Ministry wants to implement together
Out of the four major labor codes, the Wage/Wage Code was approved by the Parliament in 2019, the remaining three codes were approved by both the houses of the Parliament in 2020. The Labor Ministry wants to implement all the four codes simultaneously.
What is in the new wage code?
According to the Wage Code Act, 2019, the basic salary of an employee cannot be less than 50% of the cost of the company (CTC). At present, many companies reduce the basic salary and give more allowances from above so that the burden on the company is reduced. Let us know about its provisions.
Salary structure will change completely
With the implementation of the Wage Code Act, 2019, the salary structure of the employees will change completely. The ‘Take Home Salary’ of the employees will decrease, because by increasing the Basic Pay, the employees’ PF will be deducted more, that is, their future will be more secure. Along with the PF, the contribution to the gratuity will also increase. That is, the take home salary will definitely decrease but The employee will get more amount on retirement.
Take home salary will decrease, retirement will improve
Due to the increase in Basic Pay, the PF of the employees will be deducted more, then their take-home salary will decrease. But, their future will be more secure. This will give more benefit on their retirement, as their contribution to Provident Fund (PF) and Monthly Gratuity will increase.
Difficult for companies
Let us tell you that the CTC of the employees depends on many factors. Like Basic Salary, House Rent (HRA), PF, Gratuity, LTC and Entertainment Allowance etc. With the implementation of the new Wage Code rule, companies will have to decide that the other factors to be included in the CTC, except the basic salary, should not exceed 50 percent. This can increase the headache of companies.
Worry of high salary people will increase
The impact of the cut in take-home pay will be minimal for low- and middle-income earners. But high income earners may get a big setback. If the PF contribution of high earners will increase more, then their take home salary will also be sufficient, because the employees whose salary will be higher, their basic salary will also be higher, hence the PF contribution will also be cut more. Gratuity will also be deducted more for such employees. Basic salary is taxable, so tax will be deducted more if the salary is higher.