New Delhi: Government job and private sector employees are worried about getting less money in hands in near future than they are getting now. This has happened because there are reports about four new labour codes. Now, the central government is keen to implement these four labour codes in a couple of months. Once these new labour codes or wage codes are implemented, there will be change in your salary and PF contribution, according to a PTI report.
What Will Happen to Your Salary, PF Share?
When the Central Government starts to implement these four labour codes, it will have impact on salary, take-home income, and PF or Employees’ Provident Fund (EPF). These labour laws will result in take-home salary cut, and increase employers’ share of the provident fund. With the implementation of the impending new wage codes, there will be big changes in calculation method
of basic pay and provident fund of an employee’s salary, according to a PTI report.
Under the new wages code, allowances under an employee’s salary are capped at 50 per cent. So, once the new rules are implemented, the half of the gross pay of an employee’s salary would be
basic wages. Now PF contribution is being calculated as a percentage of basic wage. The basic wage includes basic pay and dearness allowance (DA), the PTI report says.
So far, the employers have been splitting wages into numerous allowances so that basic wages can be kept low. This reduces provident fund and income tax outgo. However, the new wages code
has a stipulate proportion of provident fund out of gross pay. Under the new wage code, the proportion of PF is the 50 per cent of total gross pay.
When Will Your Take-Home Salary Go Down?
The labour ministry had envisaged implementing the four codes on industrial relations, wages, social security and occupational health safety & working conditions from April 1, 2021. These four labour codes will rationalise 44 central labour laws.
According to the PTI, some states had already circulated the draft rules. These states are Uttar Pradesh, Bihar, Madhya Pradesh, Haryana, Odisha, Punjab, Gujarat, Karnataka and
Uttarakhand.
The ministry had even finalised the rules under the four codes. But these could not be implemented because many states were not in a position to notify rules under these codes in their
jurisdiction. Labour is a concurrent subject under the Constitution of India and therefore both the Centre and states have to notify rules under these four codes to make them the laws of
the land in their respective jurisdictions.
“Many major states have not finalised the rules under four codes. Some states are in the process of finalising rules for the implementation of these laws. Central government cannot wait
forever for states to firm up rules under these codes. Therefore it is planning to implement these codes in a couple of months as some time would have to be given to establishments or firms
to align with new laws,” PTI reported quoting a source.