After the new labor code that comes into force from April 2021, the employer can restructure your salary package. There can be an increase in benefits plans like gratuity and leave encashment, which may affect your salary under the new rule.
new Delhi. In the new year, the structure of your salary may change, that is, your basic salary may include some part of allowances. After the new labor code that comes into force from April 2021, the employer can restructure your salary package. Explain that if the government implements the new definition of the wedge, then the PF contribution will also increase. With PF contribution, companies may have to review their salary increment budget. There may be an increase in benefits plans like gratuity and leave encashment due to which the new rule may affect your take home salary.
There can be big changes in salary structure-According to sources, a new salary structure may come into force from next year. Depending on the new structure, in any case your basic salary may not be less than 50 percent of the total salary. That is, from April 2021, the basic salary will have to be 50 percent or more of the total salary. In such a situation, your basic salary and PF contribution will increase, but there may be some decrease in take home salary. After this new wedge rule, a big change will be seen in the salary structure.
Review of benefit plan can be done – Companies can now review the benefit plan of staff under different models. These include things like gratuity and leave encashment. In fact, in companies where staff stay for a long time, things like gratuity and leave encashment come to the fore.
how the whole process can be changed – According to the proposal made in the budget 2021, companies are now creating a mood to change their functioning. If an institution adopts an expanded definition of salary, it may have to increase its contribution to the provident fund. Contribution in the first PF relied on basic pay, this included DA and special allowance with basic pay.
The staff working in companies in India is actually paid 30 to 50 percent basic of gross salary. Along with this, the structure of his salary is completed by adding the remaining allowances. Experts said that some companies can put 50% of their staff salary as basic pay.
. There are two demands of the industry – first, the government should clearly decide which allowances will be clubbed with basic salary and which allowances will not be given. Apart from this, a condition has been laid that it should not be applied uniformly on the whole sector. Sectors should be fixed for this. According to sources, now the government and industry will sit and classify those sectors.
When will it be implemented – Codes on minimum wages have been approved and the government has started the process of making rules. Along with the rulemaking process, allowances can also be included in basic salary.
