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New Wage Code in India | Wage code effecting Salaried Employees in India.

The Centre had notified four labour codes – the Code on Wages, Industrial Relations Code, Social Security Code and the Occupational Safety, Health and Working Conditions Code.

They are set to replace 29 labour laws, which have remained unchanged since Independence. However, states are required to notify rules under the four codes to enforce these laws in their respective jurisdictions. Only 23 states and Union Territories have published the draft rules under the Code on Wages. The codes will be implemented when all states are on board.

The new labour codes, which are expected to be implemented from 1 July, will bring with them a big transformation in work culture. From working hours, salary received in hand, WFH, Eligibility for leaves and other areas. 4 Days working per week: The proposed new labour codes allow companies to have 4 working days instead of 5 or 6. But it doesn't mean lesser work, employees need to meet the 48-hour work hours per week. Instead of 8 hours every day, now employees are expected to put in 12 hours.

The reduced working days do not mean a cut in paid holidays. Those working four days would get three paid holidays every week.

Increase in PF Contribution: The take-home salary amount will be decreasing, as there will be an increase in PF contribution by both employees and employers. The PF contribution is required to be a proportion of 50 per cent of gross pay. Eligibility for Leaves: Earlier, the law required to have worked for a minimum of 240 working days in a year to ask for leave. It has now been reduced to 180 working days.

However, the quantum of leave earned remains unchanged – for every 20 days of work, one day of leave is earned. The number of leaves which can be carried forward will continue to be 30. Final Settlement of Wages: The new labour code mandates that the payment of salary to an employee who is getting separated from the company for various reasons including resignation, retrenchment or termination, be made within two working days of his or her exit.

At the moment, many states do not mandate ‘resignation’ for determining this timeline of two working days. The full and final settlement by employers differs from companies to companies some have a period of 2 to 3 month. The new labour law looks to drastically bring this time period down to two working days.


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