New labour rules with change in work hours, pay to come into effect from Oct 1?

The Narendra Modi government may come up with some changes in the four labour codes that were passed in Parliament to ensure the new rules are implemented across the country from October 1.

The four new codes on industrial relations, wages, social security and occupational health safety (OSH), and working conditions will rationalise 44 central labour laws, the government has said. According to reports, all the four codes will be implemented at one go.

The existing provisions of the new rules will lead to an increase in working hours for employees from nine to 12 hours, while the in-hand salary will also see a change. Under the new wage code, allowances have been capped at 50 per cent, which will lead to half of the monthly pay being calculated as basic wage. Provident fund (PF) contribution is calculated as a percentage of basic wage, which includes basic pay and dearness allowance. Increase in basic pay will result in an increase in the PF contribution, which will reduce the take-home pay for workers. The PF liability for employers will also increase in many cases.

Many employers split basic wages into numerous allowances to keep PF contributions and income tax outgo low. Once implemented, employers will have to undertake restructuring exercises as per the new code on wages.

Union Labour Secretary Apurva Chandra had announced on February 9 the new code will allow organisations to let their employees work for four days instead of the currently mandated five if employees are working for 12 hours a day. The Centre has also proposed a provision for free medical check-ups for workers through the Employees State Insurance Corporation.

The new industrial relation code will also let firms with upto 300 employees go for retrenching, closure, and lay-offs without permission from the government, a move the Centre government has claimed would “enhance” the ease of doing business.

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